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By: Jeff James

Listed Under: Top Story

Published: Thursday, March 22, 2012

The run-up to Christmas 2011 was one of the most talked about retail periods in recent memory, given the immense economic pressures our country, our retailers and our consumers were facing.

Inflation was at five per cent, the eurozone was in chaos, unemployment was at a record high and several high street mainstays were staring at bankruptcy. We wanted to understand consumer purchasing habits over this period, with a particular focus on whether or not there was a continued shift to online purchasing despite the widespread high street discounting that was witnessed.

Track
With the NPD Online Consumer Panel, we are able to accurately track the purchase behaviour of consumers over time and see up-to-date information on what is currently happening in the market.

High street foot traffic was one of several metrics that economists analysed in order to get an early feel for Q4 results before the end of the trading period. However, if consumers are shifting from bricks and mortar to online retailing, we could argue that less foot traffic on the high street is to be expected. Furthermore, if consumers were, on average, spending more money online than on the high street, we could argue that foot traffic might not be an accurate indicator of the economic strength of a particular retail period.

So what were the results? The British Retail Consortium reported a 5.1 per cent increase in footfall for December 2011 when compared to December 2010. Looking at the NPD data to see how this translated into sales, we can see that bricks and mortar retail operations represented about 80 per cent of the market, or almost £945 million, for the final quarter of 2011, but had a growth rate of only one per cent versus 2010. The online retail market for sports apparel and footwear topped £190 million, or more than 16 per cent of the total market. When we compare this number with the same period in 2010, the online market has grown by 3.5 per cent.

Drivers
What is driving the growth in online retail? Buying products online could be perceived as less expensive, so perhaps consumers are shifting to the internet for a cost saving benefit during difficult financial times. However, if we examine the average selling price for Q4, we can see that, perhaps surprisingly, the online purchase price is almost £4 greater than the in-store one.

Perhaps consumers were flocking to the internet for increased discounted products? Even here, the average selling price of a discounted online item was more than £2 higher in price than in-store.

Interestingly, when we examine the reasons consumers gave for purchasing at a specific retailer, of those who purchased online the most important factor was price. When we look at those who purchased in-store, the most important factor was location. So even though the internet consumer is more motivated by price, he is still paying a higher average price than the bricks and mortar consumer.

What we can see here is that the consumer will typically do more research on a higher priced item in order to ensure that he receives the best price possible. With the development of product comparison websites, it has become very simple to discover which retailer is offering the lowest price. We also know that spending on discounted products is increasing, meaning that consumers are purchasing higher priced items online and in return receiving a bigger discount. Consumers are happy to purchase lower priced, more ‘every day’ items in-store, combining the purchase trip with other errands or grocery shopping.

Sophisticated
As we are all undoubtedly aware, the large multiple door retailers have sophisticated online operations as well as a strong high street presence. The challenge for the independent retailer is to ensure that the consumer is not offered further encouragement to shop from a multiple by not developing their own online shopping experience.

Looking to the future, we can expect to see online sales continue to grow and take share from bricks and mortar locations, especially given the prevalence of price checking websites, barcode scanning mobile phone apps that give instant price feedback and increasing online competitiveness.

The NPD Group monitors the sales of sports footwear and sports apparel in many countries around the world. For more information contact The NPD Group sports team on 01932 355580.