Retailers heartened by the strong growth in online retailer spending last year should prepare for more of the same for this year, next year and beyond, Forrester analyst Christopher M. Kelley told the National Retail Federation Annual Convention & Expo in New York this week. The boom in online shopping has been fueled by new consumers buying online and these new users will continue to grow through 2007, he said.
By the end of this year, the number of households that will have bought online will have increased by 53% since the start of 2000, growing to 43.3 million from 28 million, according to Forrester Research. “Anyone who thinks we’ve seen great growth should know we haven’t seen anything yet,” Kelley told attendees at the “Evolving Profile of Web Buyers” session.
The mass movement of buyers to the web is changing web-based retailing, he said. As a result, retailers need to prepare to change how they operate on the Internet, he warned. For one thing, average income of web buyers has fallen from $75,000 six years ago to $55,000 today, just above the average household income of $51,000. That means that the brands where lower-income consumers shop, such as Wal-Mart, will have a tremendous advantage online, he said.
Another notable change is the rise in the average age of online buyers from the low 40s in the late ‘90s to 48 today. That means online retailers will have to make gift services, such as gift wrapping and gift card enclosures, more prominent, Kelley says. Many of the older users will buy on the Internet for grandchildren or other family members who are not nearby. “And because these buyers are mostly inexperienced online, you’ll have to glare these gift services right in front of them,” he said.
Forrester bases its results and projections on consumer surveys that produce 8,000 to 60,000 completed surveys per project, Kelley reported.
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