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20/05/2005

RESEARCH

Home shopping catalogue sales overtaken by Internet

Retail analyst Mintel found that catalogue shopping plummeted from 53% to 25% of the home shopping market, as online sales overtook it, rising from 9% to 32% in 2004.


"Mail order has failed to change or diversify sufficiently to appeal to today's more demanding and sophisticated home shopping audience and Mintel believes that the situation is largely the same across Europe.

Home shopping retailers must admit that the days of the big book are over and that the great hope of the home shopping industry is, or should be, the Internet. The trouble with the mail order industry at the moment is that it tends to see the Internet as a threat, where it should be seen as an opportunity.

The Internet is still seen by many as an exciting, new and convenient way to home shop, while catalogues are often seen as old fashioned and downmarket," explains Richard Perks, Director of Retail Research at MINTEL.

Last year two in three (67%) British adults had done some form of home shopping (catalogue, Internet or from a direct seller) in the previous 12 months.

This is a significant uplift on the 58% in 2002/2003, with this growth entirely a result of the progress of the Internet and to some extent also interactive TV shopping.

The overall home shopping market in Europe was worth some 67.2 billion Euros in 2003, increasing marginally to 68.2 billion Euros in 2004.

In terms of value, mail order catalogues still make up the largest part of the sector, with some 65% of the market, but it appears to be in long term decline.

The 'big book', the 1,000 page catalogue is slowly losing market share. Indeed, the European mail order catalogue market was worth some 43.5 billion Euros in 2003, which is around 3% of all retail sales. Although the market is expected to grow fractionally to around 45.5 billion Euros by 2009, by this time the mail order catalogue market will in fact make up just 2% of all retail sales.

"The big book is the wrong format for the 2000s as customers want a more clearly targeted offer. Much the same has happened on the high street where the 'all things to all women' retailer has struggled and struggled badly.

Both high street and home shopping retailers need to be much more clearly differentiated these days," comments Richard Perks.

While on-line shopping is growing and attracting many new customers, the traditional operators have not responded to the challenges of the new technology. Mail order companies have the logistics and expertise to be able to lead home shopping over the next decade, but they show little sign of having the will to do so. With a few honourable exceptions, too many seem unwilling to admit that the world has changed.

Otto is the market leader in Europe and it is a worthy one. It really does lead the market in many ways - particularly in the all important factor of developing an on-line business.

arstadt Quelle (KQ) Mail Order follows closely behind, but both mail order and high street retailing for KQ are struggling. Redcats, Shop Direct Group and Klingel follow some way behind and make up the remaining top 5 companies in Europe.

There has been a lack of vision among the leading UK mail order companies, as they seem to have been unable to admit that the industry is changing.

"Home shopping works best in conjunction with other forms of retailing, yet too few home shopping retailers are prepared to look beyond their own method of operation. This is as true for direct sellers as it is for mail order companies.

This means that too much of the growth in the sector is going to high street retailers or Internet pureplays rather than to the companies who have all the industry expertise," explains Richard Perks.

"There is a place for home shopping and it will grow its share in the longer term. But if the existing players do not respond quickly it will be new operators, such as Internet pureplays or the mail order businesses associated with store based retailers, such as Tesco, Argos or Fnac, which will be the beneficiaries.

The future for the home shopping industry lies in responding to the opportunities opened up by the Internet. The sooner it realises that the better," adds Richard Perks.

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