Retailers shift their ad spending from TV, radio and print ads to digital ads.
While retail sales grew little or not at all, growth in web-based buying was robust.
If anyone needed evidence that Internet-based shopping is here to stay, they need look no further than retailers’ first quarter sales reports that came out in May. In many cases the Internet portion of sales grew much faster than traditional channels. And in some cases, traditional channels suffered declines while Internet sales roared ahead. Meanwhile, the U.S. Department of Commerce reported last month that e-retail sales in the first quarter were 33% higher than in the first quarter of 2000 (see table).
A sampling of retailers who report web sales:
Internet sales at Geerlings & Wade, wine merchants, grew 86.5% in the first quarter to $1.8 million, while overall sales shrank 15.3% to $7.2 million. Internet sales now account for 16.5% of all sales vs. 11.3% a year ago.
Lands’ End’s web sales grew 40% in the first quarter to $54 million from $39 million a year earlier, while overall sales grew 9% to $311 million.
Sales at Bluefly.com grew 24% in the first quarter to $4.6 million from $3.7 million a year earlier. Bluefly attributes the growth to more sales from repeat customers and growth in the average ticket to $129 from $99. Bluefly’s operating loss was $3.9 million for the quarter, down from $5.7 million a year ago.
First quarter sales at Drugstore.com grew 44% to $32.8 million, while the average ticket grew to $62 from $39. Pro forma net loss was $21.8 million.
April sales at The Spiegel Group were down 2% and same-store sales for Eddie Bauer stores were down 10%, but Spiegel’s web sales were up 76%.
Apparel retailer J. Jill Group Inc. doubled web sales in the first quarter to $12.4 million, while companywide sales grew 30% to $63.3 million.
While April department store sales at J.C. Penney Co. Inc. grew 1.8%, sales at the web site grew 38.5%, reaching $18 million, although web sales are still but a blip on the ledger of Penney, where department store sales amounted to $1.1 billion in April.
“This is a permanent shift in how consumers buy and it points out the absolute necessity of being a multi-channel retailer,” says Mark Larson, national partner in charge, retail industry, for consultants KPMG.