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Online retailers benefit from economic downturn

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Etailers are doing well as the recession bites. A move to stock cheaper lines and offer discounts to attract customers is paying off, a new report has found.

And as a result, demand for staff with online-specific skills has been boosted.

Understanding the Impact of Online Trading on UK Retailing 2010, written by IFF Research for Skillsmart Retail, the sector skills council for retail, suggests that etailers who have adapted to changes in the wider economy “have been able to continue growing their online sales even as store-based retail has taken a greater hit.”

“For a minority of budget-oriented retailers,” it says, “the recession proved actually more of an opportunity than a threat, with shoppers trading down from more expensive products and becoming new customers for their brand.” with online specific skills.

Grocery retailers in particular developed less expensive lines to meet the consumer desire to cut their spending. One groceries retailer interviewed for the report said: “We have just geared things up to the price people want to spend. So instead of taking the strategy whereby we say, ‘Right we have got to try and do everything we can to try and get customers to spend more,’ we’ve said, ‘Actually let’s just get more and more customers, and let them buy more often but gear up our offers to what they want to spend.”

But as well as crediting economic changes for their success, retailers, the report found, also put the growth in their online sales down to their increased skill in the field. At the same time, more retailers are selling a greater percentage of their store stock on websites.

Trends noted by the report included the growing importance of website personalisation to customers, through additional resources including customer forums, blogs and social networking tools. “In the last couple of years,” says the report, “brands have recognised the importance of going to where the customers are.”

Web analytics and m-commerce are also key areas for online development, while there’s a recognition that continuous, rather than staged, development is required to keep up with the competition.

Challenges for the future, the report found, vary depending on the retailer’s sector. Clothing retailers are looking to bridge the “information gap” by providing as much detailed information and photography as possible. Email marketing sees brands in this sector looking to emulate fashion magazine design values. Electrical retailers are focusing on multichannel interactions in order to boost the confidence of customers who are often making a high-value one-off purchase. Meanwhile grocery retailers are looking to improve their logistics in market where competition makes the offer of precise delivery slots a priority.

And customer service is a priority in all areas of online retail, with a boost to resources in order to ensure enquiry emails are answered in “hours rather than days”. Retailers, said the report, “need to be aware of customer expectations of their website, particularly with regard to sizing information and stock availability. Returned goods are not only a cost for the retailer but also a disappointment for the customer. Improved product information therefore not only reduces costs for the retailer but also customer satisfaction.”

Cross-channel integration is the final area of future focus, and will see retailers keeping in-store staff up-to-date with website developments.

All of this means that there will be future demand for employees with skills in web analytics, an area one retailer said was “about to explode”, IT strategists able to integrate different platforms and technologies, and business managers with multichannel experience. Digital marketing, it’s found, now requires different skills while social media knowledge is also a must for marketers. Web designers need to focus on usability and the customer journey, especially with regard to m-commerce, while content management roles are also set to see greater investment.

Anne Seaman, chief executive of Skillsmart Retail, said the report showed etailing had the “greatest potential for growth compared to its high street cousin. It also highlights how important having staff with the right skills is to ensuring retailers can take full advantage of the opportunities of the digital revolution.

The SkillSmart report is being launched at a House of Commons reception tonight. It can be downloaded here.

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