Wednesday, 2 July 2008

Web Wins

With prospects of a gloomy economic future gathering momentum and the credit crunch a buzz topic in today's society, it is interesting to contrast the potential repercussions on the high street compared with those of pure online businesses.

On Monday online fashion retailer ASOS.com announced that sales had increased by 80% for the year (to April 08). The organisation have cited various on site improvements for the jump in financial performance but remain cagey about their ability to sustain this level throughout the year.

On Wednesday however, major high street retailer Marks & Spencer announced that sales had dropped by 5.3% in the past three months causing a 20% drop in share price. Chairman Sir Stuart Rose said "consumer confidence levels have deteriorated markedly and market conditions have become more challenging"

These performance figures are clearly polarised. It is interesting to note that in a retail market that is facing a dim 12 months, online performance is above expectations.

I predict that if the economic downturn is as bad as financial pundits are predicting, pure online businesses will be impacted to a lesser extent than more traditional multichannel retailers.

Due to the amount of credit available in the past few years, consumers have become accustomed to purchasing with fewer restrictions. This consumer mentality will remain, even as purse strings begin to tighten. People like to buy stuff.

Therefore, it is natural to assume that consumers will become more active online as they try to seek out the best possible prices for the same products. This will create a small surge in online activity.

Caveat
It should be acknowledged that there are two separate demographics at play here. ASOS appeals to a younger market that are less affected by the reducing house prices and rising interest rates. I don't know enough about fashion to be able to comment on the size of the overlap between their respective customer bases.

1 comment:

Frenchie said...

Just read and enjoyed your blog! Firstly good name Rich :) Secondly good pic, nice to see your a skier! And Thirdly interesting stuff to read about marketing, and good to hear about google going down 7times last year!

I've just set up a skiing website Plooka.com and so as you can imagine I'm working on SEO and marketing online. Couple of great discoveries recently - Facebook, clever as you can target age and sex! And also google alerts is quite cool as it notifies you of new content on the web related to keywords you choose.

Anyway I'll keep an eye on the blog!