Online shopping in Europe remains resilient

The economic downturn may have kept many European consumers away from stores, but online shopping stayed resilient through the crisis as people spent more time at home and strove to find the best deals through Internet research.

Recent reports from European statistical agency Eurostat and Forrester Research Group, a technology and market research company, show that while retail sales in Europe lost ground from 2007 to 2009, online sales kept growing steadily during that stretch. "The continued growth in Internet sales may, in part, reflect consumers deciding to stay at home, rather than spend their leisure time in shops or consumers hoping to find lower prices through online shopping," Eurostat notes.

Forrester reported that 57% or European online consumers it surveyed believe they can find better deals and value online. "Furthermore, the Internet kept its popularity even during the economic recession possibly because more than a third of European online consumers shop online because they can't find the product they want in the stores," said Forrester. As the economy improves and broadband connectivity increases, "it is highly likely that consumers will continue to look to the Web for purchasing because of the benefits they find in using this channel."

Forrester expects online retail sales within 17 European countries including France, Germany, the U.K. and Switzerland, to grow by a yearly rate of 11% over the next five years.

Patti Freeman Evans, an e-commerce expert with Forrester, said that retailers are gradually recognizing the exponential value of marketing their products on the Web but they are still failing to become flexible and dynamic to react to the demands of "highly complex" customers, she notes.

Some companies are only now waking up to the idea of online retailing. Peter Farren, a retailing analyst with Bryan Garnier & Co. in London, said companies he follows closely, such as Spain's Inditex SA and Sweden's Hennes & Mauritz AB, are still in their infancy when it comes to online sales. Inditex, owner of the Zara brand, recently said it will roll out its online Zara store later this year in six European countries, while Mr. Farren estimates that H&M's online-sales growth is still in the single digits.

Others, however, have made the most of the new tools offered by the Internet to improve customers' overall shopping experience and become leaders in the online space. Argos, a U.K. multi-channel retailer that sells everything from flat-screen TVs to frying pans, lets online users view the products they shortlisted in a separate table, allowing for easier feature-by-feature comparison. Customers who buy a product online can either pick it up in store or have it delivered. Online sales at Argos, a unit of Home Retail Group PLC, amounted to 26% of its revenue in 2009, up from 21% in 2008.

To be sure, it is easier for Argos, which began as a catalog company, to make the switch to online sales. More traditional brick-and-mortar retailers have to make more of a shift to do well in Internet commerce.

Fnac, a French retailer of books, music and electronics, lets customers who are looking for a CD listen to excerpts of some or all of its songs on Fnac.com. And the Web site's FnacLive section features video interviews with visiting authors, actors and musicians and even allows users upload their own content. Xavier Flamand, general manager for Fnac.com, said providing additional services online is key to pushing Web sales up. Fnac, a unit of PPR SA, expects online sales to grow to 20% of total sales from the current 10% in the new five to 10 years, Mr. Flamand said.

Retailers' online-sales growth potential is important as the Western European market is still relatively immature, Forrester said. While 48% of surveyed online users in the U.K. said they regularly use the Internet to make purchases, only 10% of Spaniards and 11% of Italians said they do so.

The discrepancy can be explained in part by a lower broadband penetration in Southern European countries, where online retailers have therefore taken longer to emerge. "There is nothing homogeneous about the European market," Forrester's Ms. Freeman Evans said.

Retailers looking to grab a growing share of the online-shopping sector will have to find ways to attract consumers online and offline through different tools and methods, Ms. Freeman Evans said. "Retailing is a complex environment and customers are using multiple interfaces like the Internet, their mobile phones and traditional catalogs." The key, she said, is to offer "a combination of [channels] that makes more sense for them."