Online shopping is becoming mainstream, according to Mark Parry, partner retail and consumer, PriceWaterhouse Coopers (PWC) strategy group.
Mark Parr: online channel has become a mainstream
Speaking at the IGD’s Global Retailing Conference, Parry told delegates: “This time it’s for real. Our research is telling us the online channel has become a mainstream issue – the reality is finally catching up with hype.” Parry revealed online sales growth between 2000 and 2003 had kept pace with forecasts, reaching £5bn. Since then, however, experts have underestimated the growth of internet retailing and growth has accelerated, he said. The shoppers have also changed, Parry added. Back in 2002, online shoppers were younger, from higher socio-economic groups and male. Today the age profile is more even, lower income groups are more represented and it is more female. “They are not Internet shoppers, just shoppers. Online shoppers are looking more and more like offline shoppers.” According to PWC’s research over half – 54% – of people shop online but there is latent demand with 68% claiming they plan to shop online in the future. PWC has identified three key user groups: veterans, developing and newbies. Net vets shop across up to nine categories and spend 10 times what newbies spend online. Developing users and newbies are likely to make clothing their first online purchases. However, online penetration is across categories such as CDs, DVDs, books, clothing etc, and PWC’s study shows there are no barriers to what consumers are prepared to buy online, even cars. Parry said the attractions of online shopping included price, speed, male impatience and 24/7 availability. One factor that limits online shopping, however, is that shoppers like to try before they buy. That said, PWC predicts online sales will reach £36bn in the next five years and of the additional £41bn added to retail sales by 2011, £25bn will be generated online. Parry highlighted the benefits of online for consumers and brands alike. It enables retailers to offer a wider range of products and prices. Procter & Gamble, for instance, only sells its premature baby nappies via the online channel, while the north-west supermarket chain Booths offers 32,000 wines via its online site versus 600 in store. “We will see more and more online-only products,” said Parry. “Online can offer more options from core ranges.” The online channel will also be used to create a dialogue with the consumer, said Parry, via user-generated content and blogs and he revealed P&G has recruited 600,000 so-called connectors to stimulate debate on its products. Parry added the role of stores will change as online sales accelerate. “The impact on business will be enormous,” he said and urged delegates to “to make it a big part of your plan this time because it’s for real”.
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