For Online Retailers, Reduced IT Investing Today Means Grim Holiday Season Tomorrow, IDC Says
FRAMINGHAM, MA – DECEMBER 19, 2001 – According to IDC, eretailers should heed the message of the ghost of Christmas yet to come: if you pinch pennies today, expect a grim holiday season tomorrow. This message comes as consumer spending during the holiday season shifts from catalogs and in-person shopping to online ordering.
According to a recent IDC survey of U.S. consumers, 72% of Americans will spend the same or more this holiday season compared with last year. However, the way this money is being spent is changing. Survey results show 46% growth in the value of online orders over the same period last year. This news is encouraging for eretailers, but they must keep pace with IT investing, IDC says.
"Although e-shopping is expected to increase at a level in 2002 comparable to that in 2001, the opportunity for retailers to take advantage of this opportunity is threatened by reduced IT spending," said Carol Glasheen, IDC’s vice president of Global Market Models and Demand-side Research
· In 2002, U.S. holiday ecommerce will reach $26 billion, a 49% increase over 2001.
· Although consumers are spending more of their holiday budgets online, e-shopping and consumer ecommerce in general will be constrained by supply, as reduced IT investments resulting from the economic slowdown limit some eretailers’ ability to meet the demand.
Future holiday e-shopping will be limited not by consumer demand, but by supply. According to IDC, with the U.S. economy in recession and consumer confidence down, U.S. retailers are continuing to hold back on new IT investments including B2C applications and ecommerce infrastructure. In addition, businesses also haven't invested in the channels and logistics required to meet an expanded supply. Future holiday e-shopping will be limited not by consumer demand, but by supply. There will be two effects of this spending slowdown:
1. eRetailers will miss the opportunity as the number of online customers increases over the next year, including the next holiday season. "There will be 100 million online buyers in the U.S. by 2005. All retailers need to do is reach them," Glasheen said. "However, reduced investment in B2C applications such as online order processing or order fulfillment in 2001 will impact consumer ecommerce in 2002 because the channels, logistics, and infrastructure needed to support an expanded supply will not be in place for all would-be eretailers."
2. Retailers skimping on IT investments now will be out of the online holiday market altogether next year. According to IDC, the lost revenue associated with the decreased investment is approximately $4 billion in 2002.
IDC recently published The Ghost of Christmas Future: Don’t Miss Next Year’s Holiday Rush (IDC #26122). This bulletin examines the 2001 U.S. holiday ecommerce season and forecasts the growth in online holiday shopping through 2006. To purchase this report or for more information, contact Demetra Georgakopoulos at 1-800-343-4952, extension 4496, or at firstname.lastname@example.org.
IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world’s leading IT suppliers, IT organizations, ebusiness companies and the financial community. Additional information can be found at www.idc.com.
IDC is a division of IDG, the world's leading IT media, research and exposition company.
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