Online purchases soften compared to 2007, but revenue impact grows
by Jaime Guillet
Following anemic consumer spending leading into the holiday shopping season, retailers locally and nationwide say they will capitalize on their largest entry to potential customers — the Internet — by marketing themselves online via dot-com tools such as Facebook and MySpace.
More New Orleans area retailers say they are expanding their use of the Internet and online advertising to reach customers during what many economists expect to be an uncomfortably lean holiday period.
“Online sales are higher because we have the universe to choose from and the store is just who’s here (in town),” said Vicki Moran, marketing director for Orient Expressed, an Uptown purveyor of specialty children’s clothing, linens and home décor.
Orient Expressed branched to the Internet about 10 years ago and only sells its children’s clothing online. Although in-store sales remain competitive with its Internet and catalog purchases, online sales for Orient Expressed during the 2007 holidays trumped the other options.
“Those sales have been good and last year was extremely strong, although I don’t expect (online sales) to be as strong this year just because of what’s going on,” Moran said.
Down the road from Orient Expressed, Silk Road Collection owners Donald St. Pierre and Robert Turner say their online sales have more than doubled in 2008. The Chinese antique furniture store specializes in one-of-a-kind pieces dating back to the 17th century, as well as original New Orleans artwork.
In 2007, Internet sales represented 15 percent of Silk Road’s total sales. In the first 10 months of 2008, Internet sales comprised 36 percent of the store’s overall sales. In-store sales also increased 8 percent between January and October over the previous year. But without the growing success of online sales, the store wouldn’t be making it, Turner said.
“Online sales are the only thing keeping us alive,” Turner said. “Summer was awful. I can’t change the local economy, and the New Orleans market is a finite market.”
But even within a limited market, the Internet helps capture more business close to home, Turner said.
“Our first very Internet sale was to a lady in Algiers who had never been in the store,” he said. “It’s a very valuable tool. Our sales have been steadily increasing — it’s not huge — but fully attributable to the Internet.”
Turner and St. Pierre launched their Web site in mid-2006. They started with an electronic newsletter that has now built up to 4,000 addressees. With the growing success of e-commerce, Silk Road has stretched its online marketing to include listings in Google Shopping, Yahoo Shopping, eBay and last month, the social online networking site MySpace, which Turner describes as being in its “infancy.” The store will eventually expand to Facebook as well.
According to a National Retail Federation survey, 25 percent of the 60 online retailers polled said they added a Facebook page in 2008, 43 percent are adding product videos and 33 percent are posting customer reviews.
Moran said Orient Expressed doesn’t have a Facebook or MySpace page “yet.”
Independently owned apparel stores in New Orleans, such as Rubensteins, aren’t falling in line with the survey’s results. Whitney Guarisco, a Rubensteins spokeswoman, said maintaining a Web site for apparel is very labor intensive because the inventory and sizes must be constantly updated. With the current economy, retailers may find it’s not the best time to invest capital to develop a site and increase labor, she said.
And although retailers are expecting their online sales to be their strongest sector, reports show online sales are slowing. Last week comScore Inc., a digital retail research company based in Reston, Va., found online consumer spending in October grew by only 1 percent over October 2007, the smallest monthly growth rate since it began tracking e-commerce in 2001.
Curtailed spending across mid to lower income segments “with households earning less than $50,000 exhibiting negative spending growth compared to a year ago” influenced the overall softness in online retail spending, according to comScore Inc.
Still, many retailers are issuing glowing responses about their online sales.
Denise Incandela, president of Saks Direct, Saks Inc.’s online sales division, said online sales were up 30 percent in the first six months of 2008 over the prior year and fall numbers are “still running positive.”
Although Saks does not have pages on Facebook or MySpace, the company “has participated fairly aggressively in social media for the past year,” Incandela said.
“We have all our videos on YouTube and we’re pushing content rather than banner advertising,” Incandela said. “We’re very pleased. We’ve reached a younger audience, and we continue to have a marked dedication to reaching out online.
“It’s the wave of the future and we want to participate.”
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