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Date:15 May 2012

Recession? What recession?

Source: Eccomplished

Online retailers are planning for and investing in growth in 2012

The UK may have tipped back into recession, and the high street indicators may be less than promising, but UK retailers are optimistic when it comes to online sales.

In fact, many are setting themselves ambitious targets. More than 60% are planning to grow online revenues by more than 10%, whilst a significant minority of retailers (9%) is forecasting online revenue growth of 50% or more.

That’s the headline from the latest round of original research from Eccomplished – the Online Retail Innovation Index. We’ll explore the results in detail over the coming weeks but, for now, here’s a taster…

Solid year

Why are retailers expecting online sales growth to outstrip general economic growth so significantly? Perhaps the answer is in sales performance from 2011 which, despite dire predictions, turned out to be a solid year for the majority:

Overall, 88% of retailers reported revenue performance in line with or above expectations for 2011
42% said revenues outstripped expectations
Just 2% reported revenues as being ‘way below’ expectations.

Investing in growth

With those figures in mind, it’s easy to understand why confidence might be high – an assertion backed up by retailers’ investment plans for 2012. Across the board, retailers plan to invest almost a third of their annual budgets on innovation – hardly a ‘batten down the hatches’ outlook:

100% of retailers will invest in innovation during 2012 – a commitment that is clearly in line with a desire to drive revenue growth
The largest online retailers will spend proportionately more on innovation – 36% of total annual spend.

A quick look at what retailers plan to invest in is also instructive. It seems that the strategy almost across the board is to build on solid performance in 2011 by investing in customer loyalty – but not at the expense of projects and enhancements designed to capture a larger share of wallet:

74% will invest in customer loyalty and retention
60% will seek to expand internationally
67% will invest in new channels to market
65% will spend on performance optimisation.

Getting to grips with the connected consumer?

Overall then, the picture is one of optimism and ambition – but backed by real investment in innovation.

Interestingly, and as we will see in forthcoming articles, a significant proportion of retailers’ spend on performance optimisation boils down to on thing - putting in place the immersive experiences and robust analytics required to first engage users and then monitor and understand shopper behaviour.

That seems a sure sign that retailers are determined to get to grips with the increasingly sophisticated and fickle demands of constantly connected consumers – the digital natives who have grown up with social and touch and who retailers must learn to attract and retain all over again.

Over the coming weeks we will releasing a series of articles exploring the Innovation Index in detail. We’ll uncover how growth plans and investment vary according to business size (by revenue) and the scale of growth plans. We’ll identify the main barriers to growth and how they affect retailers’ priorities for the year ahead. Finally, we’ll look further ahead, to identify retailers’ innovation priorities for 2014.

Watch this space…

This article is based on the Online Retail Innovation Index – an original research programme commissioned by Eccomplished and carried out by Coleman Parkes Research. All findings are based on detailed interviews with 100 decision makers in online retail, drawn from a sample of retailers with online revenues exceeding £3m.