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Online Retail Growing Despite Economic Woes

January 30, 2009

According to a report from Forrester Research, Internet retail sales will likely rise in 2009 despite the economic recession.

Online retail sales are projected to climb 11 percent in 2009 to $156 billion, excluding money from online travel sales. 

Although the mark continues to grow, the projection shows a slowdown in the overall growth rate which was 13 percent in 2008.

The projection is also smaller than the 15 percent increase Forrester projected last January.

“The reason is obvious: falling consumer confidence due to the recession,” wrote Forrester analyst Sucharita Mulpuru.

According to Mulpuru, the majority of 2009 growth will come at the expense of brick and mortar stores. 

She believes online revenue will continue to make ground on physical stores because of the ease to compare prices and to find products.

“Even as companies continue to struggle, the important take-away is that the Web is continuing to grow,” Mulpuru told Reuters News. “It’s taking wallet share away from the rest of the retail world.”

In 2009, online sales are expected to make up 7 percent of the overall retail revenue.  The number is a 1 percent increase over 2008, despite a slowing economy.

According to Mulpuru, Web-based retailers like Amazon.com are primed to capitalize on the trend, while other big retailers, such as Macy’s and Best Buy, could capture a disproportionate share of online consumers due to their brand recognition.

“That’s pretty standard that the web divisions of all of these companies are faring much better than the rest of the business. Those are the ones grabbing disproportionate market share,” Mulpuru said. “A lot of that is happening at the expense of smaller players who are not as branded or not as trustworthy or not as easy to find online.”

The numbers are part of a larger set of projections by Forrester due to be released on Monday. 

Forrester gathers mail and online surveys that question consumers on shopping and spending habits to calculate its projections.

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