Silver lining for web marketers?

The economy is forcing online retailers to change their marketing tactics in order to acquire and retain customers, according to findings from The State of Retailing Online 2009, the 12th annual Shop.org study conducted by Forrester Research Inc. The survey of 117 online retailers also found that, while the number of companies focusing on customer retention has nearly doubled in the past year, many retailers see the recession as an opportunity to capture market share from weakened competition.

"While Internet sales continue to outpace traditional retail sales... companies are bullish about web operations: four out of five retailers think the web is better suited than other channels to withstand the recession and one-third say the downturn has enabled them to capture greater market share. Illustrating the resilience of the web, retailers report that their conversion rates continue to hover between 3 percent and 3.5 percent as they have for years."

“Retailers everywhere are trying to get their arms around a pullback in consumer spending, and online retailers are no exception,” said Scott Silverman, executive director of Shop.org. “Online retailers are trying to weather this economic storm by doing more with less, making smart spending decisions, and leveraging effective, affordable tactics like email to grow their businesses.”

Others... "see the economy as an opportunity to increase market share and are charging ahead with new initiatives. Almost half of retailers surveyed (46%) have no plans to cut back original budgets and will spend as planned on their web business, while one in four retailers (24%) will spend more on their online business than originally planned. Companies planning to spend more will increase investments in several areas, including search (80% of respondents), email (65%), and social marketing (60%)."

Despite the focus on customer retention, many retailers — primarily multichannel retailers — say their efforts at customer acquisition will be higher this year than last year. But for those retailers that operate primarily online, customer retention (which has historically been a distant second goal for this group) is now critical.

According to the survey, a majority of retailers (88%) list email as a high priority for the year, largely to retain customers. Almost three-fourths of retailers (71%) plan to send segmented emails to customers based on stated preferences or purchase data. In addition, more than half will use emails that highlight new product availability (55%), extend invitations to participate in surveys or garner customer feedback (55%), and feature online-only promotions (53%).

“Because consumers continue to spend online, interactive marketing spend to drive web sales remains a lucrative investment,” said Sucharita Mulpuru, Forrester Research principal analyst and author of the report. “While other retail channels struggle, eCommerce managers have a unique opportunity to drive more sales and test different tactics that resonate with consumers.”

Industry Indicator

According to the Semiconductor Industry Association (SIA) sales of semiconductors were $14.7 billion in March, a gain of 3.3 percent from the prior month.

Boosts for confidence, causes for optimism

The US Conference Board said that its consumer sentiment index had climbed to 39.2 during April, from an upwardly revised 26.9 in March. The April reading, which was above economists' expectations of 29.8, was the highest since November 2008.

The Case-Shiller index showed that US house prices were down by 18.6 per cent in February, from a year earlier. The figure was an improvement on the 19 per cent decline recorded for the 12 months to January.

US Federal Reserve: The central bank reinforced markets' hopes that the worst may soon be over for the economy, and renewed its pledge to keep official interest rates on hold at close to zero “for an extended period”.

Consumer Confidence

American consumer confidence has ticked up to its highest since the collapse of Lehman Brothers in September 2008. The Reuters/University of Michigan index rose to 61.9 in April, from 57.3 in March, to be at its highest since 70.3 last September.

The U.S. has 304 million consumers and they have more than one million retail outlets at which to shop (not to mention mail order and web-based businesses). Retail is a $4 trillion a year industry.

Construction sentiment

The National Association of Home Builders/Wells Fargo housing market index of sentiment rose to 14 in April from 9 in March, emerging from single digits for the first time in six months. It was the largest one-month gain since May 2003.

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