£9bn of general merchandise retail sales will be influenced by the internet this Christmas...


07-12-2011

By value, over half of all general merchandise retail sales will be influenced by the internet this Christmas, according to business advisory firm Deloitte.

• 50% of all general merchandise purchases will be digitally influenced; 20% will be multichannel

• Price comparison sites, peer reviews and social networks become integral part of the multichannel shopping journey

• Connected consumers to spend more at Christmas

With the firm predicting zero growth in Christmas retail sales overall this year, this would still mean around £9bn of non-food sales are digitally influenced. Digitally influenced includes direct online sales or multichannel transactions where consumers interact with retailers across a number of touch points including stores, online, social media, peer reviews and smartphone or tablet apps. In total, around 20% of the value of general merchandise sales this December will be multichannel.

Ian Geddes, UK head of retail at Deloitte, said: “The importance of online to UK retailers is no secret, but our research demonstrates the impact the internet plays in the whole shopping journey. Before the explosion of the digital marketplace, consumers engaged with businesses primarily through single channels and had limited access to information or opinions about the product or service. Now, they are benefiting from higher levels of pre-transaction research and evaluation.

“The size of the digital and multichannel opportunity is far greater in non-food where consumers are more likely to make considered purchases, unlike food which are more often impulsive and still predominantly occur in store. However, whilst only a small number of food transactions are digitally influenced (4%), their value will be higher, particularly at Christmas, where people take advantage of online discounting and home delivery to purchase bulky items such as wine and beer.”

Deloitte’s latest multichannel research, published today in the firm’s Consumer Review shows that 51% of multichannel shoppers use social networks as part of their research before purchasing, 32% use review forums whilst 13% refer to blogs. 74% of multichannel consumers use price comparison websites, whilst 31% use voucher code sites.

Colin Jeffrey, head of multichannel retail at Deloitte, added: “Consumers have embraced digital media and are increasingly confident about interacting and transacting online. With trust in traditional sources of influence decreasing, they are turning to their peers or communities online for advice and to share information and opinions. Furthermore, the current economic climate is accelerating the rate at which consumers are adopting digital behaviours as they rebalance their spending and turn to digital solutions to seek out savings and value.”

Whilst the value of the average transaction across stores, online and multichannel is slightly lower compared to this time last year, multichannel consumers are still spending the most, with store only customers spending the least per transaction. On average, multichannel consumers spent £143 per transaction compared with direct shoppers who spent slightly less (£102) and store only customers who spent £57.

Electricals remains the category with the highest proportion of digitally influenced transactions by some distance. By value, 58% of transactions were digitally influenced, compared with 25% of homeware sales and 24% of clothing.

Jeffrey said: “Purchases of electrical goods involve high levels of engagement and planning for the consumer, with a substantial price gap still evident between channels. At the other end of the scale, sales of clothing are often driven by impulsive behaviour. Still, online clothing sales have the potential to grow because of the combined online presence of mail order players (having successfully crossed into multichannel retail) and niche pure online players, offering flexible, intelligent shopping and service delivery.”

Geddes concluded: “Whilst the store remains the biggest single channel by volume and value, it now forms just one part of a shopping experience made of numerous channels. The digital revolution has created a new ‘path to purchase’ for consumers. Suppliers and retailers are being increasingly challenged to serve them along a more complex decision-making process.

“Looking ahead, we expect a period of continued digital disruption to the traditional retail model. This will be followed by the emergence of a more seamless experience for consumers armed with smart devices and accessing a ‘personal cloud’ that enables organising, synchronising and sharing personal information and media with friends, family and their favourite companies.”
 

 

The Deloitte Cambridge office comprises 8 Partners and over 250 staff who deliver a full range of professional services to the East Anglian region. As well as focussing on the life sciences and technology sectors for which the region has become so renowned, the office has long standing specialisms in other sectors including the professions, consumer business, food and agribusiness.

Deloitte LLP