June 2009: Consumers Shift from Traditional Retailers to Online

The recession has accelerated the rise of a new breed of independent consumers who meticulously research big-ticket items as well as everyday purchases online. These consumers honed their Internet research skills during the 2008 holiday shopping season when, in search of savings and memorable gifts, they deftly moved between sites and tried different online shopping tactics.

US Department of Commerce retail e-commerce quarterly sales estimates chronicled the effect of the deepening recession on consumer spending in 2008. Online sales (excluding travel) increased 4.6% in 2008, but growth slowed progressively by quarter. By Q4 2008, sales actually contracted 4.9%—making the holiday shopping season a dismal time for online retailers.

As disappointing as sales were online, retail industry sales (almost all of which represents store sales) were even more lackluster in 2008. Sales shrank 0.6% for the year and each quarter produced less growth than in the e-commerce channel.

Consumers are increasingly researching purchases online, yet they have reined in their spending. The years of double-digit growth rates are in the past. After the slow growth in 2008, eMarketer forecasts that continued recessionary pressure will cause online sales to contract by 0.4% in 2009.

To cope with the new economic realities, online retailers have been forced to reduce spending on inventory, ads and customer service. But smart online retailers have found creative ways around some of these compromises, including relying more on employees for creative marketing ideas and IT solutions. These retailers have continued to invest in new features, such as product videos, that create a more compelling shopping experience and promote customer loyalty.

The current economic upheaval has weakened traditional retailers, putting consumers’ wallets up for grabs. Online retailers that can fill the void through superior customer service, rich product information and greater shopping convenience have a chance to win new customers for life. 

Find out more about eMarketer’s digital marketing and the new report “E-Commerce in a Recession: The Impact on Consumers and Retailers

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