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Ecommerce set for slowdown, says Verdict

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Online retailers have “had it easy” over the last decade, but that’s all set to change as growth in ecommerce slows down in years to come. That’s the judgement from analysts at retail consultancy Verdict.

In its eRetail 2010 and Beyond report, Verdict predicts a ‘significant’ slowdown in the growth of online shopping thanks to the maturity of the market and increased competition.

Spending on the web will continue to increase by more than 56% to £35bn over the next four years, it forecast, and it will also continue to outpace total retail. But the rate of that increase will slow considerably from an average of 35% a year over the last decade to 12% a year between 2009 and 2014. And though by 2014 there will be 32.5m UK shoppers, that’s only four million more than at the moment, as the market reaches maturity.

Malcolm Pinkerton, senior retail analyst at Verdict, said: “With the number of people shopping online becoming highly saturated, retailers will have to change and evolve their online strategies. Driving loyalty and increasing spend per head across all age groups will become vital factors to ensure growth.”

The group says the highest-spending group of customers, those aged 34-44 and likely to have young families, are most likely to cut back in the face of forthcoming government cuts.

Instead, it sees more potential in the 15-24 and 55+ groups. To meet the demands of the younger age group, retailers must focus on use of pictures, video and mobile, while the older group wants a service-oriented customer experience linked to brands they already trust.

Multichannel retailers are at an advantage, since they operate 14 of the 20 most-used shopping sites.

Senior retail analyst Sarah Peters said: “The online shopper is extremely valuable. Retailers have had it relatively easy online over the past decade because of the channel’s rapid growth and lack of competition, but just as in overall retail, the next five years will be much more challenging.”

Jeff Dakin, managing director of customer loyalty specialist Htec, said: “With the outlook for a more measured rate of growth in eRetail, the ingenuity of UK retailers will clearly be tested over coming years.”

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