Statistics from Interactive Media in Retail Group (IMRG) show that online retail spending increased by 75% in 2007. Disappointing retail sales on the high street have been offset by bumper online sales. IMRG predict that by 2018, internet sales could reach 50% of all retail spending.
In particular the internet has squeezed profit margins of low cost retailers. If you want to succeed on the high street, there is a need to offer something different, a niche, highly valued product. Therefore, brand names like Marks and Spencers may continue to do well – they don’t compete just on price. However, electronic goods will increasingly be dependent on cost factors.
Despite the record rise in internet sales and predictions for the future, many firms are reluctant to invest time and resources into developing their internet presence and internet sales.
On the internet, there is a lot to be said for being early into the market. Being the first firm enables you to get a privileged market position, brand loyalty and Google rankings, Amazon UK have posted record turnover results and prospects look good for the biggest online retailer.
Many firms used the web to launch the sales on Christmas day. It is estimated 25% of web users on Christmas day bought something.
Other technological advances put more pressure on traditional retailers. The rise of e-book readers increases demand for buying e-books online rather than traditional shops.