Colorado Springs Retail Briefs: April 11, 2008

Online spending is expected to increase 17 percent this year, despite a sluggish economy.

Retail sales online, excluding travel purchases, are expected to grow to $204 billion, compared to $174.5 billion during 2007.

Online sales are fueled by sales of apparel, computers and automobiles, according to The State of Retailing Online 2008 study conducted by Forrester Research Inc. for Shop.org, the online arm of the National Retail Federation trade group.

"From higher shipping costs to changes in consumer shopping habits, online retailers are not immune to the current economic climate," said Scott Silverman, executive director of Shop.org. "But the fact that online sales will increase substantially this year demonstrates the resilience of the channel and is a testament to the value and convenience most customers find when shopping online."

While the growth projection is below the 21 percent increase seen during the prior year, industry officials attribute the decline to the maturing of the business, not the sluggish economy.

"What's spearheading online retail sales growth is a tale of two shoppers that visit the Web for very different reasons," said Sucharita Mulpuru, Forrester Research principal analyst and lead author of the report.

One category of online buyers is price-sensitive shoppers, who appear to be buying more items online as they look for better prices.

The second category of shopper is the more affluent customers who have been increasing their online spending because of the convenience and variety of offerings.

But shoppers looking for deals might not find the free online shipping deals as plentiful as they did last year.

The study, which surveyed 125 online retailers during February and March, showed that merchants are less interested in using such promotions this year.

While 85 percent of online retailers said they used some shipping incentive during the past year, just 35 percent said they would focus on these types of deals during 2008.

Instead, retailers said they plan to invest more in advertising on social networking sites like myspace.com and facebook.com, according to the survey.

Retailers also report that search engine marketing continues to be the most effective way to reach new customers, citing 35 percent of sales coming from that initiative.

As a result, nearly all online retailers surveyed (90 percent) use pay-for-performance search placement, and 79 percent said they will make this tactic an even greater priority during 2008.

Companies also are using offline marketing tactics to drive customers to the Web, with catalogs and other direct mail pieces taking priority over methods like television and newspaper advertising.

Finding locals on the Web

The MerchantCircle program helps local business owners compete with national brands, especially on the Web.

MerchantCircle, an online network of business owners with more than 385,000 members, developed "MerchantCircle Verified," a Web service designed to increase consumer trust in local search results.

The program is designed to help local business owners compete with established brands during difficult economic times.

According to a Nielsen/NetRatings survey, 78 percent of respondents said they used the Internet more today than two years ago.

"We've done a lot of research with our merchant base, studying the effects of the down economy on their businesses and we wanted to do something to alleviate consumer fears about the Web," said Darren S. Waddell, senior director of marketing at MerchantCircle. "MerchantCircle Verified will boost trust in local merchants and better enable them to compete with national brands on the Web."

Merchants who qualify for the "MerchantCircle Verified" program will receive a special badge on their business listing, indicating a higher level of trustworthiness.

La-Z-Boy wins award

La-Z-Boy Furniture Galleries/Portland has received the Shingo Prize in the research category for its innovative sales training program.

The award, named for Japanese industrial engineer Shigeo Shingo, recognizes innovative practices in improving business processes.

The Shingo Prize in research promotes research and writing regarding new knowledge and understanding of business processes.

The La-Z-Boy Furniture Galleries/Portland program integrates the concept of "Training Within Industry" to develop best practices in the sales process and organization.

The TWI concept, originally created and used by the U.S. government to train 1.6 million women to support the World War II effort, has been adapted for the retail arena by La-Z-Boy Furniture Galleries/Portland.

Using role playing as its core attribute, the program encourages a supportive sales culture that leverages and improves the customer experience by gathering and using more robust customer information.

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