THE 2007 EUROPEAN CHRISTMAS SEASON WILL SEE STRONG ONLINE SALES

For European retailers, good tidings start in October, when consumers gradually embark on their Christmas shopping. This year, we expect the online Christmas shopping season to bring in more revenues than ever, with the majority of spending taking place in November and December. We estimate that 39% of annual online sales will take place during this period to account for €51 billion ($71 billion).(see endnote 1) The healthy European Christmas season online retail figures are the result of:

A third of Europeans shopping online. This year, 58% of European Net users will shop online. Big variations exist between countries: The UK, Sweden, and Germany are far above the average, with around 70% of Net users shopping online. Italy and Spain fall below average, hovering around the 30% mark.(see endnote 2)

The online Christmas shopping season starting early. Some consumers start their Christmas shopping as early as October, but the majority of shopping is crammed into the four weeks leading up to Christmas. We see the same pattern emerging for online Christmas shopping. Our analysis of monthly data from the UK Interactive Media in Retail Group (IMRG) reveals that in 2006, online retail spending in October, November, and December showed double-digit month-on-month growth; in January 2007, online sales then fell back to pre-October numbers (see Figure 1).(see endnote 3)

Strong consumer confidence. Both strong national economies and increased familiarity with online shopping have buoyed this. In contrast to the US, the prospects for the European economies are better than they have been for years, and growth forecasts are on the up.(see endnote 4)

Figure 1: The European Online Retail Christmas Season Runs From October To December

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Highlights: European Christmas 2007 Online Sales

Our projection for the total 2007 online Christmas season shopping spend is €51 billion across 17 Western European countries and 22 retail categories.(see endnote 5) How do individual countries and retail categories fare?

The UK and Germany lead. With €20 billion in online Christmas sales, the UK will be far ahead of other European countries in overall online Christmas spending (see Figure 2). Although Germany has a larger number of online shoppers — 33 million in Germany versus 27 million in the UK — total online Christmas spending in Germany will fall €8 billion short of the UK figure because German online shoppers will spend less per person.

France, Italy, and the Netherlands follow. French online shoppers will spend €6.5 billion during the last quarter of 2007, followed by Italy with €2.1 billion, and the Netherlands with €1.9 billion. But per online shopper, the Dutch will spend more than the Italians — an estimated €323 versus €225. The smallest online shopping markets this Christmas will be Luxembourg, Greece, Portugal, and Ireland, each with less than €250 million in online sales.

Gift items see the biggest seasonal sales uplift. We project double the average quarterly online sales for the following categories: books, videos and DVDs, clothing, jewelry and watches, toys, video games, consumer electronics, and alcohol (see Figure 3). We expect furniture, footwear, home appliances, and tools, garden, and home improvement supplies to show flatter performance.

Leisure travel, clothing, and consumer electronics will claim the most spend. The top three categories will account for more than half of the Christmas season's online spend, of which leisure travel will bring in €15 billion, nearly a third of the total — it's the largest online sales category throughout the calendar year, and, on top of that, it sees a healthy Christmas season uplift. Other €1 billion-plus categories for this Christmas season's online retail spend are books, event tickets, jewelry and watches, computer hardware, food and drink, alcohol, household goods, health and beauty, and tools, garden, and home improvement supplies.

Figure 2: Forecast: European 2007 Christmas Season Online Retail Spend By Country

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Figure 3: Forecast: European 2007 Christmas Season Online Retail Spend By Retail Category

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ENDNOTES

1. We used an exchange rate of $1.40 for €1.00. Back to Text

2. These data charts are based on data from Forrester's European Technographics® Benchmark Survey, Q2 2007. See the August 30, 2007, "European Online Shopping Landscape 2007" report. Back to Text

3. We provide the monthly trend but purposely omit specific monthly figures. This data can be obtained from the UK Interactive Media in Retail Group (IMRG). Back to Text

4. According to the EU's Economic and Financial Affairs Spring Economic Forecasts 2007 – 2008, overall economic prospects in Europe look bright, resulting in the European Commission lifting its forecast for economic growth in the EU to 2.9% in 2007. Visit http://ec.europa.eu/economy_finance/publications/european_economy/forecasts_en.htm for more information. Back to Text

5. The countries comprise: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the UK. Retail categories comprise: software; books; music; videos and DVDs; event tickets; flowers; clothing; footwear; jewelry/watches; toys; video games; sports goods; computer hardware; consumer electronics (TVs, hi-fis, radios, phones); food, beverages, and household supplies; beer, wine, and spirits; health and beauty; home appliances/household electricals; household goods; furniture; tools/DIY/garden; and leisure travel. Back to Text

Find Documents In Related Categories This document falls under the following categories. Click on a link below to find similar documents. Analyst: Michelle de Lussanet, Victoria Bracewell Lewis Technology: eBusiness/eCommerce, IT Adoption, IT Spending & Budgeting Industry: Business-To-Consumer eCommerce, Consumer Retail & CPG, eBusiness/eCommerce Adoption, Retail Special Feature: Forecasts Geography: Europe

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