August 29, 2002, 12:00 AM

Web-influenced sales will surge in Europe, says new Forrester report

Web-influenced retail sales in Europe will surge to 172.4 billion euros in five years, but to tap that growth retailers must implement effective multi-channel strategies tailored to their customer bases, Forrester Research Inc. reports.

 

Web-influenced retail sales in Europe will surge to 172.4 billion euros (US$168.93 billion) five years from now, but to tap that growth retailers must implement effective multi-channel strategies tailored to their customer bases, Forrester Research Inc. reports. It notes that web-influenced sales now represent three times as much revenue as online sales and will continue to grow at a compound annual rate of 18%, reaching 5% of Europe’s total retail sales in 2007.

The challenge for retailers will be to entice consumers "to use the right channels for the right transactions and interactions," said Amsterdam-based Forrester analyst Hellen K. Omwando. "To do this, retailers need to focus on three principles: understand cross-channel shoppers, know where to close a sale, and prioritize technology investments for 2005."

In its report, "Choosing the Right Retail Channel Strategy," Forrester suggests that retailers focus on one of the three key channel strategies by 2005, when it figures the retail industry will begin realizing the benefits of investments in cross-channel technology. Such technology includes web site systems that make it easy to close a sale online or that provide product details online to support in-store shopping.

Forrester offers as an example entertainment products like video games and music CDs, where online sales are expected to outperform web-influenced sales by 2005. "Retailers in this category should limit their efforts in driving sales offline and instead focus on tailoring their web sites to close sales online," the researcher said. "Conversely, do-it-yourself or furniture retailers should focus their web sites on driving sales offline, with detailed information on product dimensions and color schemes and an online option to book an in-store appointment."

In other retail categories, however, the distinction between online and web-influenced sales will be less sharply defined, requiring different multi-channel strategies, Forrester said. For example, in food supplies, "there will be minor differences between ‘Net-influenced sales and online sales, so supermarkets should encourage consumers to be channel agnostic by offering identical product prices offline and online, but apply delivery charges that match the target consumer’s convenience-value perception," said Omwando. "To mitigate running costs, retailers that choose this route and lack the necessary scale should outsource the daily operations of their web sales as Waterstone’s has done with Amazon.com."

Over the next five years, Omwando said, German retailers will enjoy the bulk of Europe’s cross-channel sales. By then, 16 million Germans will be cross-channel shoppers, spending 40 billion euros (US$39.2 billion) in web-influenced sales. She said UK retailers will see web-influenced sales outweigh online sales by a factor of two in 2007, with 38 billion euros (US$37.2 billion) of web-influenced sales. In France, where she said consumers are just beginning to be comfortable shopping on the web, web-influenced sales will account for about three times as much as web sales by 2007, reaching 23 billion euros (US$22.5 billion).

 

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