May 1, 2001, 12:00 AM

Retailers should stay on track with web expansion plans, says Forrester

Despite a slowing economy, it would be a mistake for retailers to abandon their Internet-based selling ventures as overall web use and web spending per household are on the rise.

Kurt Peters

Executive Editor

Retailers can’t afford to curtail e-commerce initiatives despite a slowing economy, says Forrester Research. “Borders’ blunder in abandoning its online business may improve its financials for next few quarters [see Internet Retailer, News, April 11], but it’s missing the big picture that other retailers thinking of pulling the plug on e-commerce cannot ignore,” says Forrester analyst James Crawford.

The experience of some individual retailers notwithstanding, online sales and usage are increasing significantly overall. The number of U.S. households with online shoppers is expected to grow from 35 million in 2000 to 55 million by 2005, predicts Forrester. And even in the new economy, old retail truths about success apply. “Retailers need to be where their customer are, and their customers are online,” Crawford says. Forrester also notes that in addition to growth in the number of online shoppers, sales per shopper are also increasing on the web, with average annual online spending per household growing from $1,271 last year to $1,722 this year.

To capture that growth, retailers will need to move with the times, notes Forrester. That means better integration among channels as well as forging new relationships among marketplace competitors that cooperate to drive sales in return for a share of the gains. For example, by hooking up with manufacturers and other retailers, a store like Gump’s could help valuable customers locate hard-to-find cutlery by searching partners like Bloomingdale’s and Henckels in real time and then share revenue via pre-negotiated agreements, Forrester says. “As consumers integrate the web into their lives, they’ll take the Internet for granted,” notes Crawford. “Retailers can’t afford to ignore the transformation.”

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