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.

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  • Nic, I couldn’t agree more. Here in North America the situation is just as bad. 100% growth of nothing isn’t much. I’ve written the Top 5 reasons Retail Advertising isn’t on the Internet. http://wikidomo.typepad.com/linking_local – Let me know what you think…

  • Nic, I couldn’t agree more. Here in North America the situation is just as bad. 100% growth of nothing isn’t much. I’ve written the Top 5 reasons Retail Advertising isn’t on the Internet. http://wikidomo.typepad.com/linking_local – Let me know what you think…

  • Anonymous

    Hi Nic

    Wouldn’t place too much reliance on Minitel numbers as they (+ Juniper ETC.) get lost in a research haze of statistics. Better to focus on addressable retail as nobody is ever going to buy a mars bar online. Here I go direct to source – 18% of all Argos sales are now ordered online and Littlewoods, Findal and other mail order titans are at 50%+ from a base of zero five years ago.
    IMRG are probably closer to the retail pulse and they have online retail at 15% of the UK pot.

  • Hi Nic

    Wouldn’t place too much reliance on Minitel numbers as they (+ Juniper ETC.) get lost in a research haze of statistics. Better to focus on addressable retail as nobody is ever going to buy a mars bar online. Here I go direct to source – 18% of all Argos sales are now ordered online and Littlewoods, Findal and other mail order titans are at 50%+ from a base of zero five years ago.
    IMRG are probably closer to the retail pulse and they have online retail at 15% of the UK pot.

  • nic

    Thanks Liam. Very useful comment.

  • nic

    Thanks Liam. Very useful comment.