Waving or drowning? The online lifejacket.

The British Retail Consortium is predicting that December’s retail figures will not be pretty. And as other retailers – USC and Adams - bite the dust, and Woolworths prepares to shut its doors for the last time later this week, commentators are jostling for position to see who can predict the next high street failure. Debenhams, DFS, WHSmiths even….. oh the drama of it all.

In an otherwise bleak landscape, online spending continues to be a bright spot - Hitwise reported an average traffic increase to retailer sites of 2.275% YoY in the days leading up to Christmas. This increase on its own doesn’t prove that online is more resilient. As an indication of the carnage on the high street, desperate retailers broke with retailing traditions by kick-starting their sales before Christmas - a significant driver behind buyer behaviour. However the evidence does mount up, for example on the busiest online shopping day of the year - ‘Mega Monday’ (8th December) - UK online sales volumes were 18% up on YoY.

However, with the continual march of broadband and WiFi into people’s homes, and proliferation of PCs as the focus for domestic multi-media consumption (radio, social networks, TV) the migration to the web is being seen across all industries. A significant sector that acts as a clear indicator is the newspaper industry. Traditional ‘ink’ newspaper outlets are struggling to maintain revenues, consequently advertising revenues are dwindling, which is resulting in jobs being brutally cut. According to Pew Research Centre, in 2008 for the first time ever the number of consumers using the web as a main news source jumped from 24% to 40% in a year, overtaking the 35% who rely on newspapers.

So back to the world of retailing, online is certainly a channel to be embraced. In our recent Borderless report which examined the opportunities for retailers wanting to expand their operations into Europe, when used effectively this channel is a significant place and space to exploit. And without the need for pricey bricks and mortar locations, with fixed opening hours and the need for friendly staff, online is cheap, 24 hours a day, with the potential to reach every global consumer who is online, and with the additional holy grail plus point of being MEASURABLE!!

A recent news piece in The Sunday Times told of an ambitious scheme to create an online London shopping experience. It reported on a planned online scheme where retailers will be able to take virtual real estate space in an interactive computer model of London’s West End. If this gets off the ground, such a co-operative approach might just be the way that smaller retail operations can experiment with online and experience for themselves the opportunities and benefits that the channel offers. (Although I would caution against any comparisons with Second Life: for the majority of consumers, the more mainstream and accessible the technology and concept the better!)

So as the pundits continue to predict a very dismal 2009 for retailing, perhaps the wealth of online opportunities will inspire more retailers (mainstream and niche) to dip their toe in the water and see… just see what might happen. It might just be the right lifejacket at the right time.