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GROWING SEGMENT Internet retailing reverses failures of 1990s efforts

By Holly Shaw 

This is expected to be the biggest year yet for online holiday shopping, with growth seen in the range of 5% to 6%.

After numerous failures in the late 1990s, online shopping business appears to have caught on with cautious consumers -- the business hit $7.9-billion, spent on 50 million orders in Canada in 2005, more than tripling 2002's performance, when consumers spent $2.4-billion on 16.6 million orders, according to Statistics Canada.

"The earlier concerns about credit card fraud seem to have gone away and the new retailing model is 'multi-channel'," said John Williams, principal at J.C. Williams Group, referring to bricks-and-mortar stores that also sell through a Web site.

"Stores that have a Web presence have done better than those without a Web site in the past two years or so."

One of the success stories of multi-channel retailing is books and giftware retailer Indigo Books & Music Inc., where revenue at its Chapters.Indigo.ca division rose 23% in fiscal 2006 to $79.5-million.

Retailers are finding they benefit as much from online sales as they do from in-store sales that result from customers who research purchases online.

"The big buzz is about the Web-to-store consumer, those who do a lot of research online and show up in store armed with knowledge and prepared to buy," said Clark Johannson, chief executive of ShopToIt.ca, a Canadian comparison-shopping portal.

The site's success speaks to the rising popularity of customer research into product features and pricing: ShopToIt.ca launched in July 2005 with 100,000 items and now features 1.6 million items from a wide range of retailers.

A search on the site for a Sony DVD Camcorder yielded nine results, ranging in price from $555 to $599. "I'm always blown away by how much of a difference there is," Mr. Johannson said.

A Global Market Insight survey noted 98% of Canadians online have used a search engine to help research or buy a product or service.

The study said online shoppers prefer to buy from Canadian retail sites because they are typically concerned about exchange rates, duties, tariffs and shipping costs, and they prefer to keep money in Canada.

Still, there is ample room for growth in the market. While 87% of people intend to brave the mall crowds to make some purchases this year, according to a Visa Canada survey, 23% of shoppers expect to make online purchases, up from 18% in 2005.

"The business is nowhere near what it is in the [United States] because they have always had a much more evolved catalogue market, and online and catalogue sales go hand in hand," Mr. Williams said.

"But you can see those more specialized opportunities starting to happen here."

Hudson's Bay Co. has breathed life back into its TheBay.com Web site since U.S. investor Jerry Zucker bought the department store giant last year, remodelling the site from a bargain-basement "deal zone" into a marketing vehicle for its 100 stores. It is also using the site this year for a series of high-end, "one-of-a-kind-experience" gifts.

They include a hockey lesson and a follow-up chat with former Toronto Maple Leaf player Wendel Clark at his private rink, Clark Gardens in King City, Ont., ($19,500, including taxes) and a glamour opera night package including the best seats in the house for La Traviata, a behind-the-scenes tour, access to a private lounge, limousine transportation and a $500 HBC shopping spree for $7,000, including taxes.

Visit the website at www.ShopToIt.ca