Online shopping to grow despite constrained Christmas spending

Don't expect a big surge in overall retail spending this Christmas, but brace yourself for more online shoppers than ever before.

Online purchases will play a major part in Australians’ Christmas shopping this year as shoppers become more selective in what they buy for the festive season.

Research undertaken by IBISWorld and Appliances Online indicates that most growth will be in online spending and that Australians are becoming more assured about making purchases online.

IBISWorld said online shopping would make clear advances with clothing, footwear, electronics and books the most popular items on people’s wish lists, and the focus would be on buying gifts for children. That assertion was backed by data gathered by Appliances Online which said nearly 20% of people surveyed would conduct most – if not all – their shopping at online retail outlets.

Another 52% would go online for some of their gifts. Priority purchases would be music or books, fashion, small gifts and appliances.

John Winning – founder and CEO of Appliances Online – said there had been dramatic online growth over the past 12 months which had rewritten the rules of retail.

“The online retail market has become increasingly competitive, meaning consumers will benefit from fantastic deals available online this Christmas.”

But Mr Winning sounded a cautionary note despite the positive outlook for online retailers. “Retaining customer loyalty online will be the biggest trend in the next 12 months and it is important for consumers to have the best online experience possible, starting this Christmas.”

Mr Winning had some advice for online shoppers. He recommended they make a five-step check before buying.

Shoppers should ensure they checked testimonials, checked delivery times, checked delivery costs, called the retailer if they had any questions that could not be answered online, and make sure the site was secure.

IBISWorld said despite the forecast growth in online spending, results overall at Christmas would be flat. It said spending was expected to rise 3.3% on last year to total $27.4 billion. However, annual inflation of about 3.3% meant that most retailers would be “treading water”.

Karen Dobie, IBISWorld General Manager Australia, said about 34% of people intended to spend less than last year and fewer than 20% planned to lift their spend.

“In 2011, Australian shoppers have been savvy, seeking out the best value for money, the best range and the best service. This trend is anticipated to continue through Christmas.”

Ms Dobie said the trend of constrained personal shopping would also be apparent in the business sector. She said when sales and profits were weak it was extremely difficult for firms to justify additional expenditure to shareholders.

Spending on corporate gifts would be flat, with higher volumes offset by lower prices on many gifts due to the Australian dollar. “Overall, we expect Australian businesses to spend $491 million on Christmas gifts and parties for staff and clients – an increase of 9.2% on last year, but well below the $684 million spent in 2007.

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