The economy has been making some hints at ressurgance in the past few months, but it's nowhere near a complete rebound, and according to ComScore today, most of the bright spots in third quarter are only relative to the dismal results that occured last year. During its quarterly report "State of the US Online Retail Economy," ComScore chairman Gian Fulgoni characterized a generally dismal third quarter for retailers.
However, it's not all bad. Amid struggling revenues and rising unemployment, some retailers are increasing conversion rates and site visitations. What's their secret? Low prices and reliable online experiences. And there is promise in the fact that young, upper income earners are opening up their wallets again.
According to Fulgoni:
"More people are buying online. Unfortunately they don't have as much spending control. They're primarily shopping or buying less often. The good news is that we are seeing continued growth in the number of people buying online."
However, those buying online are spending more time price shopping. Consumers are visiting more retail sites than ever, but making purchases at fewer sites, meaning traffic is expanding, but conversion rates are decreasing. A few retailers are bucking that trend, namely value brands like Amazon, Wal-Mart, Best Buy and Sam's Club. Also, computer companies Apple and HP saw a 10% and 7% increase in conversion rates compared to 17% and 11% increase in visitations. That points toward consumers spending money on technology — and not just on the coveted iPhone.
Meanwhile, promise lies in the fact that luxury websites are seeing increased interest. While luxury department stores are struggling, invitation-only luxury sites are thriving, according to Comscore. Gilt Groupe saw increased visitation of 199%, ideeli 222% and Rue La La increased visits 40%. Of course, that demonstrates the equivalent of window browsing, but increased interest in luxury products is good news for sector.
Even better is the fact that some high income earners are regrowing their spending levels. Third quarter spending numbers were lower than Fulgoni was hoping for in that bracket overall. While younger upper income earners were increasing their spending levels, older top earners remained hesitant to spend: "these folks have fewer degrees of freedom to recreate wealth.... they're focusing on saving."
According to comScore:
"We’re seeing clear signs that we’ve hit the bottom of the decline in e-commerce spending, and comScore expects some modest growth in the holiday season
compared to last year."
With consumers generally spending less money, retailers are focusing more time on marketing and proving value while cutting costs and overhead. But one optimistic sign for the holidays is that most consumers haven't yet started their holiday shopping — 68% to be precise. Retailers are likely to see more boosts this holiday season than last. They're also wise to make friends with an increasingly prevelant aspect of online retail: free shipping.