Economy stunts e-commerce growth
But still stronger than bricks-and-mortar retail
By Marcy Magiera -- Video Business, 8/7/2008
AUG. 7 | Growth in consumers’ online spending has slowed dramatically in 2008 as a result of price increases and the soft economy, according to ComScore. E-commerce growth rates remain significantly stronger, however, than bricks-and-mortar retail, where growth has been negative throughout 2008 when adjusted for inflation.
E-commerce sales for the first half of the year were $106 billion including travel, according to ComScore, representing a growth rate of 12%. That’s off from growth of 17% for the full year in 2007 and 20% in 2006.
A sharper drop in e-commerce growth than offline retail sales in the first quarter indicates that offline spending is dragging down e-commerce, ComScore executives said. As prices escalate for food and fuel, which are primarily purchased offline, consumers are cutting back on discretionary spending, including online purchases, they said.
ComScore consumer surveys in April and June showed that more consumers in all income brackets are cutting back spending, and that trend escalated between April and June.
In a July 2008 survey, 43% of respondents to a ComScore survey said they are spending less on music, movies and video, compared with 61% cutting back on out-of-home entertainment, 57% cutting back on vacations and 53% cutting back on gas and automotive expenses. Fewer people said they were cutting back on home improvement (38%) and health and beauty (32%).
ComScore analysis, however, shows that online sales of music, movies and video fell 20% in the second quarter from the same period a year earlier. Sales of videogames, consoles and accessories, meanwhile grew 73%.
Consumer spending online is now evenly split between pure play e-commerce companies and multi-channel retailers with presence online and off, according to ComScore. Multi-channel retailers gained five share points in the past year, moving up to 50% in the second quarter, from 45% a year earlier.
