2006: the year of the online Christmas | | Guardian Unlimited Business

2006: the year of the online Christmas | | Guardian Unlimited Business: "2006: the year of the online Christmas


· Sales soar as Tesco.com and Amazon set records
· Premium end of high street fares best

Marianne Barriaux
Wednesday January 3, 2007
The Guardian


Shoppers seem to have spent more this Christmas than the doomsayers initially predicted, according to industry insiders, especially on the internet.
John Lewis saw its online sales soar 60% in December. Tesco.com broke all records with 1.3m shoppers buying food and presents on the site in the four weeks before Christmas - up 30% on 2005.
Amazon.com had its best holiday season, with more than 4m items worldwide ordered on December 11 - a record for a single day.

IMRG, the e-retail body, said online sales over the Christmas trading period - the 10 weeks to December 24 - were expected to have soared 50% to £7.5bn.
The organisation does not publish its official figures until January 15, but James Roper, IMRG chief executive, who had projected sales of £7bn for the period, revised the figure upward.

He said: "This has definitely been an online Christmas. We think 25 million people are now shopping online and the spike that we see at Christmas is huge. Everything combines to push people to internet shopping over the period - bad weather, bulk buying, the inconvenience of transport ..."

The number of parcels delivered is also thought to have increased to 200m from the 180m initially predicted.

The IMRG said overall online shopping now represented 10% of total retail sales in the UK, compared with just 0.5% in 2000. In 2006 as a whole, online sales were up 40% from the previous year.

The high street enjoyed a late burst and it was far from the worst Christmas in 25 years that some had predicted. Industry insiders said figures for Christmas 2006 would be good, and probably better than the previous year.

A spokesman for the British Retail Consortium, notoriously cautious about the retail outlook, said: "Last week, the indications were that things were getting better than the doom and gloom of early December. This bodes reasonably well for a good trading period."

He added that indications from high street retailers were that trading had gone well in the week after Christmas and at the weekend, when the discounts in the sales were at their fiercest.

In fact, people ignored the bad weather and came out in droves to get a good deal, with the number of consumers shopping on December 27 up 3.7% on 2005, making it the busiest sales shopping day in four years. John Lewis took £18.3m on that day, up 10% on the previous year.

But early indications are that overall performance will be very different from one retailer to another, as well as from one sector to another.

Richard Ratner, retail analyst at Seymour Pierce, believes that the premium end of the high street, which includes stores such as Liberty and House of Fraser, is going to do particularly well.

"Marks & Spencer, I think, has done well. House of Fraser has also done well, which confirms the message on the upper end of the market."

Liberty said it had had a record Christmas trading period, with sales almost 6% higher than the previous year.

But the middle market is set to be significantly tougher. HMV and Woolworths both issued profit warnings at the beginning of December, and Mr Ratner said their Christmas trading updates were likely to be bad. He said: "Debenhams has not had a brilliant time, and my gut feeling is that Blacks Leisure has had a lousy time trading-wise."

Jason Kemp, founder of management consultancy Envision Retail, said: "The fact that the middle market is tough does not mean that middle England is having a tough time. It means that middle England is changing and becoming more sophisticated as to where and how it shops."

All eyes will be on Next tomorrow as it kicks off the Christmas trading updates. Overall, though, experts agree that 2007 will be a tough year for bricks and mortar retailers as consumers come under pressure from mortgages, high interest rates and debt. Costs will also rise for retailers, and online competition will continue.