The Interactive Media in Retail Group forecasts that internet shopping sales will reach £5bn over Christmas, accounting for 9% of total retail sales. This would represent a 20% increase on last year, according to online marketing firm TradeDoubler, helped by the fact that 56% of Europeans look set to do at least 25% of their Christmas shopping online. Other forecasts put the increase on last year at up to 40%.
While this is great news for online retailers, the most astute traditional merchants have long known that the key to grabbing the biggest chunks of this business is to run their online sites in conjunction with other channels. This often involves a combination of high-street and/or out-of-town stores, catalogues, call centres and even interactive TV. It has been forecast that a customer who shops with a retailer across channels is worth up to three times as much as one who uses a single channel.
Catalogues are proving particularly interesting, as pure mail-order operators continue to have a difficult time. Verdict Research estimates that mail-order sales have fallen by 2.8% this year - a third annual downturn - representing a deterioration of £273m. But for multichannel retailers, catalogues are proving effective tools to drive customers to their online shops.
A recent Royal Mail survey found that of the 20 top online retailers, 60% use catalogues and brochures to generate online sales. The research also found that 36% of consumers believe that by browsing through a catalogue they are more likely to make an online purchase with that retailer.
For many retailers, the catalogue and the internet enable them to replicate their in-store experience through another medium. For others, they allow them to diversify into new categories. The supermarkets fall into this latter camp as they continue to extend their reach beyond the confines of their stores.
While they have been unable to fully stock many non-food categories such as electrical goods in-store, their online shops provide almost unlimited space to offer an unrivalled range, as will catalogues when they launch them.
As well as offering electrical items and white goods online, Tesco has moved into travel through a tie-up with lastminute. com and is understood to be considering whether to stock clothing online. Such has been the success of Tesco's online operation that it is to open its first dedicated warehouse for servicing the home delivery of groceries in London and the South-East.
Likewise, Asda has been using its online shop to boost its offering of non-food categories such as home entertainment, through a range of CDs, DVDs, contact lenses, flowers and travel, via a deal with Wefly.com.
Although this diversification and the multitude of statistics are proof that the multichannel approach is providing retailers with some great opportunities, they have to be careful.
Pricing is a sensitive issue and most retailers are now adopting a consistent policy across all channels. The same thinking should also be applied to all customer service aspects, such as returns policies and promotions. Any differentiation in one channel could seriously harm the customer's perception of the brand.
To achieve this requires good old retail basics, but it is not always easy to pull off, because in many cases a retailer's individual channels will have been created at different times and their integration of the back systems will often be less than perfect.
But if these issues can be overcome, there is little doubt that those retailers plying their trade across channels this Christmas can expect a far merrier time than those still ploughing a single furrow.
Helen Dickinson is head of retail at KPMG
30 SECONDS ON ... CHRISTMAS SHOPPING
- The average amount spent per head on Christmas gifts in the UK is predicted to drop by 2.8% to £310 this year.
- Spending on food and beverages is expected to increase slightly, by 1.3% to £7.6bn, with men, in particular, set to increase their outlay on alcohol.
- With personal debt at record levels, credit-card use is in decline. Four out of five consumers are aiming to pay for their Christmas shopping using only cash or debit cards.
- The Welsh are expected to be the most generous this festive season, with a spend of £359 a head; people in East Anglia are predicted to be the least generous, at £266 a head.
- A quarter of shoppers do not expect to finish their Christmas Shopping until 24 December.
- The most-wanted presents for kids this Christmas include computer consoles and games, Roboraptor toys and the Darth Vader Voice Changer Helmet.
Source: Deloitte Christmas Retail Survey 2005.