Plastic Surgery or eCommerce?

Are your shrinking retail sales causing you to consider botox? You know you’re not the only retailer suffering, but you might be surprised to hear who else is gaining worry lines along with you … and what they’re doing about it that’s really paying off.

You’ve probably heard of Gap Inc. and their clothing brands – Gap, Old Navy and Banana Republic. What you might not have heard is in September ’08 alone, Gap reported a combined double-digit drop in retail sales (in fact, Old Navy’s sales that month were down a scary 24%). Figures from across the US retail sector continue to show single-digit losses, month after month.

But take a second look at Gap through the eyes of the Internet, and the story changes. Doom and gloom turns into dollar signs. Gap’s online sales results are beyond ‘up’. If ‘up’ were a helium balloon let go outdoors, Gap’s online sales would be more like NASA’s next rocket launch.

Gap reported a 50% increase in online sales between ’05 and ’07 – double their sales in the past 5 years – and are forecasted to hit $1 billion in online sales in 2008 alone.

NZ figures from Christmas online sales last year echoed similar success for online clothing and accessories retailers.

Clothing was the second most popular product area researched, compared or purchased online in NZ, accounting for 34% (airline tickets were first at 43% and accommodation third at 33%).  The average online purchase amount for clothing was $85 NZD.

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Online is the only place you can go for an optimistic outlook for retail this year, says trends expert Nita Rollins of digital marketing agency Resource Interactive. Forrester Research predicts online retail sales will grow 12% this holiday season, the slowest growth to date, however this is still more than five times the predicted increase in retail spending in the US for November and December of 2.2%, according to the National Retail Federation.

Forrester research director Patti Freeman Evans says stores “have not suffered in any way” from the growing popularity of the internet. On the contrary, she says online research drives people to stores and creates informed shoppers.

“Online gives retailers the chance to attract customers who are hard to reach in their offline arena”, Evans says, “Gap is reaching a lot of the marketplace, but there are still people who can’t get to the store - or prefer not to”.

It also gives them a chance to get in the game when people are comparison shopping. “In some respects, online is a defensive element of their business; if you’re not there, you’re going to lose that sale.”

There is no doubt shopping online is growing in popularity. Not only have websites gotten better, but consumers are also getting more comfortable with the concept.

Some of the biggest growth in online retailing this year is expected to be in apparel. Experts say this is partly because holiday shoppers this year are focusing more on essentials, however forward-thinking retailers offering improved return policies has also given online shoppers more buying confidence.

Zoom views and improved photography have also boosted sales by making it more likely that ‘what you see is what you will get’. Despite declining petrol prices, time-pressed consumers often find it easier and cheaper to shop on websites, thanks to free or flat-rate shipping.

Already have a website that you think could perform better? Or maybe you don’t have a website, but you’d like your share of the success other retailers are getting. Take the first step and find out the NZ potential for your category online by contacting one of the consultants at Exceed Online today.