Online Food & Bev Sales Expected Up 17 Percent in '06: Study

WASHINGTON, D.C. -- Food/beverage/grocery online sales are expected to reach $6.2 billion this year -- a 17 percent increase from 2005, according to The 2006 State of Retailing Online, the ninth annual study of online retailing conducted by Forrester Research, Inc. That gain is part of a larger trend that will see online sales will top $200 billion this year, Forrester said yesterday.

Among 174 retailers, total online sales, including travel, are expected to rise 20 percent to $211.4 billion this year. Total Web sales had sped past the $100 billion mark just three years ago, said Forrester.

The largest non-travel categories this year include computer hardware and software ($16.8 billion); autos and auto parts ($15.9 billion); and apparel, accessories, and footwear ($13.8 billion), according to the study, based on surveys of retailers. Pet supplies and cosmetics and fragrances are expected to experience growth rates over 30 percent, more than any other categories.

The survey found that retailers are employing a variety of strategies to support a multichannel environment. More than two-thirds of retailers have consistent pricing across channels (79 percent), and almost half (46 percent) allow their customers to buy and redeem gift cards online and in stores. Additionally, a notable number of companies give customers the ability to accrue loyalty program points across channels (33 percent) and offer in-store product information online (26 percent).

"By encouraging different channels to work together, instead of in isolation, everybody wins," said Scott Silverman, executive director of, in a statement. "Retailers have been focusing on integrating their Web sites and stores to better serve their customers, which is paying off for companies in the form of higher sales."

Retailers recognize the importance that the online channel plays in overall sales. In fact, retailers reported that 22 percent of offline sales are influenced by the Web. Web sites can also give retailers an opportunity to reach out to an entire new customer base, as more than one-third (38 percent) of online customers are new to a company's entire business.

Retailers also understand that some shoppers might be concerned about the safety and security of their personal information when shopping online. In response, companies continue to increase the security of their Web sites and are beginning to offer a variety of payment methods to online shoppers.

According to the report, 63 percent of retailers surveyed require card verification value (CVV) codes at checkout. For payment, 25 percent of retailers accept private-label cards, 12 percent offer third-party e-mail payment options, nine percent accept eChecks, and seven percent offer third-party credit accounts.

The 2006 State of Retailing Online concludes with an analysis of the future of online retail, and says that retailers have spent much of the past year developing long-term forecasts, budgets, and personnel plans. These new initiatives are still in the planning stages and are expected to launch within the next two years.

"Retailers spent the first decade of eCommerce scrambling to react to and learn about the Internet," said Carrie Johnson, lead author of the report and research director, v.p. at Forrester Research. "Companies are now able to take a step back and are busy planning strategies and prioritizing technology investment for the long term. As a result of these efforts, the next five to 10 years of online retail will be even more competitive and more innovative than in the past."
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