All
About Market Research> Industry
Reports> Retail Industry
For Immediate
Release
Shop.org Contacts: Scott Krugman or Ellen Tolley (202)
783-7971
Email: krugmans@nrf.com or tolleye@nrf.com
Forrester Contact: Erica Cantwell (212) 672-1757
Email: ecantwell@forrester.com
Online
Retail Sales, Profitability
Continue to Climb, According to
Shop.org /Forrester Research
- U.S. Online Sales Expected
to Hit $172 Billion in 2005 -
Washington, DC, May 24,
2005--Ten years after its inception, online retailing is growing
up fast. According to The State of Retailing Online 8.0 , an
annual Shop.org study conducted by Forrester Research (Nasdaq:
FORR) of 137 retailers, 2004 online sales rose 23.8 percent to
$141.4 billion. Excluding travel, online retail sales also rose
23.8 percent to $89.0 billion, representing 4.6 percent of total
retail sales.*
The report predicts that online
sales (including travel) will rise 22.0 percent to $172.4 billion
this year. Sales excluding travel are expected to reach $109.6
billion.
Women's Retail Categories
Poised for Growth
Several retail categories will
experience steep growth this year, largely due to the growing
acceptance of online shopping by women. In fact, categories with
products purchased largely by women will see the most growth this
year. Online sales of cosmetics and fragrances are expected to
grow 33 percent while sales of over-the-counter medications and
personal care will rise 32 percent. Additionally, sales of
jewelry and luxury goods (31%) and flowers, cards, and gifts
(30%) are expected to rise dramatically.
"Though initially adopted by
men as a shopping tool, women are flocking to the Internet in
droves to comparison shop, research, and buy," said Scott
Silverman, Executive Director of Shop.org. "Online retailers who
sell products that are purchased by women are in a favorable
position this year, as we expect those categories to grow
substantially."
In addition, several categories
are expected to receive at least ten percent of their sector's
sales from the Internet this year, including: computer hardware
and software (48%), tickets (28%), travel (26%), books (20%),
consumer electronics (13%), cosmetics and fragrances (12%), toys
and video games (12%), and flowers, cards, and gifts (10%). This
year, a total of 13 categories will reach the five-percent
penetration point.
Profitability Continues to
Climb
Multichannel retailers again
posted record profitability last year. Last year, online
retailers improved overall operating margins to 28 percent from
21 percent in 2003. Catalog-based retailers continue to boast the
best operating margins, which rose to 32 percent last year from
28 percent in 2003.
"With profitability behind
them, retailers can now focus on innovation and growth through
things like increased integration of their online and offline
businesses and internationalization of their sites," said Carrie
Johnson, lead author of the report and Principal Analyst at
Forrester Research. "One way retailers will grow sales over the
next several years will be by launching country-specific sites
and operations to accommodate a growing number of international
customers."
Online Retailers Find Search
Engine Marketing Pays Off
One of the most compelling
findings of the study addressed retailers' marketing budgets and
the effectiveness in marketing through certain channels. This
year, search engine marketing appeared as the clear leader as a
source of new customers, with retailers reporting that search
engine marketing delivered 43 percent of overall customers to
their sites. In 2004, 87 percent of retailers who participated in
the study used pay-for-performance search placement and spent
more than twice as much from their marketing budgets on this
category than they did in 2003 ($877,630 in 2004 vs. $399,923 in
2003).
Multichannel Retailing
Advances
According to the study,
retailers are keenly aware of the importance that their website
plays into their overall sales goals. In fact, retailers reported
that the Web influenced 20 percent of in-store sales. As a
result, retailers are striving to integrate their stores and
websites, which signals cooperation among channels.
Last year, almost all (92%)
multichannel retailers included URLs on in-store materials, up
from just 77 percent in 2003. The majority of retailers (81%)
also used websites to tout their stores. Additionally, 45 percent
allowed consumers to purchase and redeem gift cards online and in
stores, up from 30 percent in 2003. And nearly one-fourth (24%)
of retailers offered in-store product availability on their
websites last year.
About The State of Retailing
Online 8.0
The State of Retailing Online
8.0 is a detailed survey that is based on information from 137
retailers that shared their confidential data. It explores the
opportunities and challenges facing retailers selling and
marketing on the Web, including store-based, catalog-based, and
Web-only retailers.
Forrester is an independent
technology research company that provides pragmatic and
forward-thinking advice about technology's impact on business.
Business, marketing, and IT professionals worldwide collaborate
with Forrester to align their technology investments with their
business goals. Forrester offers products and services in four
major areas: Research, Data, Consulting, and Community.
Established in 1983, Forrester is headquartered in Cambridge,
Mass. For additional information, visit www.forrester.com.
Shop.org is the association for retailers online. It's where the
best retail minds come together to gain the insight, knowledge,
and intelligence to make smarter, more informed decisions in the
evolving world of the Internet and multichannel retailing.
Founded in 1996, Shop.org became a division of the National
Retail Federation in January 2001. The association's membership
includes interactive executives from store-based retailers,
catalog-based retailers, Web-based retailers, and retail solution
providers.
###
* "Retail Sales" exclude travel
and include the following categories: sporting goods and
equipment; flowers, cards, and gifts; health and beauty; consumer
electronics; other (subscriptions, art, and collectibles);
apparel; jewelry and luxury goods; home; food and beverage;
books; tickets; computer hardware and software; music and video;
toys and video games; auctions; auto and auto parts. These are
not the same categories that the National Retail Federation
tracks; therefore, the numbers are not comparable.
For more Retail Industry information see Retail Industry.
