Online Christmas worth £1.8bn

New research from Nielsen predicts that online retail sales this Christmas will be worth £1.8bn.
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The British Retail Consortium (BRC) and market research specialist Nielsen expects on-line retail sales for 2007 to reach almost £16 billion, 35% more than in 2006.

However, despite this high level of growth, purchases on-line will still only be around six per cent of the year’s retail sales. The growth has been driven by consumer’s willingness to spend on-line due to better broadband access, improved on-line offers and improvements in security.

This year, the BRC estimates that £1.8 billion worth of Christmas related goods will be bought on-line, approximately 15 per cent of the £12 billion that is expected to be spent on Christmas related purchases overall.

This is an increase of just over £200 million from 2006, when internet purchases represented around 13 per cent of total Christmas spending. With most of the consumers shopping on-line this Christmas intending to spend roughly the same amount on-line as last year, the majority of growth will come from an increase in the number of on-line shoppers, rather than an increase in spend.

Just over half of consumers will do some of their Christmas shopping on-line this year. The BRC estimates that each on-line shopper will spend an average of £70, compared with an average spend per head of £365 in stores. However, more people are using the internet to compare prices, with 63% of consumers referring to the internet before making a purchase, up from 35 per cent in 2006.

Sales growth is likely to be driven by families and under 35 year olds, who make up the vast majority of those intending to use the internet to do their Christmas shopping and of those who intend to spend more on-line than last year. Young couples without children and families with children are more likely to increase their usage of the internet this Christmas, while over half of families without children, childless older couples and older singles are likely to use it less or not at all. Of the under 35 year olds who intend to increase the amount they buy on-line this year, most are aged between 16 and 24 years old.

Consumers living in the North of Scotland are intending to increase their on-line purchasing the most this Christmas, with 10 per cent of those intending to shop on-line stating they intend to spend more this year, compared with nine per cent of Londoners and six per cent of those living in East Anglia.

Consumer confidence in shopping on-line has increased, with the percentage of consumers only buying from brands they trust falling from 48 per cent in 2006 to just 34 per cent, intensifying the level of competition, due to the higher number of retailers vying for a share of on-line spending.

Kevin Hawkins, BRC Director General, commented: "This Christmas the internet will be a more important channel than ever, as consumers take advantage of retailers’ improved on-line offers, increased security and cheaper broadband. There will be intense competition for on-line spending, with retailers vying for a share of this valuable channel, which is very much complementary to traditional methods of buying.”

Mike Watkins, Senior Manager, Retailer Services, Nielsen added: "With the majority of households suggesting that they use the internet for e mail, search, or banking either every day or on most days, it is now accepted as a secure and convenient way to shop and is becoming main-stream in retail. As a testament to this our research shows that, when it comes to food, one fifth of consumers intend to buy their Christmas groceries online this year. This is an increase of over 50% on Christmas 2006 and significant when considering the pivotal role that food and drink play in our festivities."



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