Internet retail growing fast but still tiny

Today the FT reported forecasts from Mintel that online retail spending in the UK and France will triple by 2012. That is a lot of growth, but maybe not that surprising when you consider the low base. Only 5% of retail spend was online in the UK last year and only 1.6% in France (the US figure is 3.4%).

The bad news is that traditional retailers are suffering as a result – at least in their physical shops. Experian Footfall said yesterday that high street foot traffic fell 2.7% in the year to March – I think that is a UK figure. The other interesting fact in the article is that internet retail is now pretty much dominated by traditional high street names, both here and in the US. Amazon is the only pure-play etailer amongst the top 10.

The good news in these facts is for the online advertising industry. The ad dollars need to be spent where people are buying – espescially so for transaction oriented below-the-line spend. Much of that will be on a CPA model. At the same time the industry will need to rise the challenges of increasing ad-blindness and intolerance of interruption. I am still excited by the potential of VRM to overcome these challenges.

I’d have linked to the FT article, but they have a paywall up.