Bad News for Halloween: People Don’t Believe Economy Will Be Better In a Year
by
on October 31, 2008,
Today comScore has some scary news (quite appropriate for Halloween, I think) for everyone tracking the news in the field of the world financial crisis reporting that e-commerce growth rate dropped to 6% in the third quarter. Total online retail sales in all the products and services categories but travel amounted to approximately $30 billion in the US this past quarter.
Of course the 6% figure can be considered to be a slowdown compared to 12% in Q1 and 13% in Q2. But after all, 6% is still growth as people spend more online than they did last year - even though it’s not that much more as we hoped for - so it is not quite fair to speak about really bad news here. I think it is safe to expect that lower costs associated with online retails will let online stores do pretty well compared to brick and mortar ones. Besides, we should not forget that even the slowed growth for e-commerce is better than growth rates in traditional retail stores.
Yet while the overall e-commerce retail may not be doing as well as everyone h
opes it to, some categories of products are doing amazingly well with video games and consoles growing by 60%, furniture and appliances by 52%, and sport and fitness products - by 40%. So while people buy considerably less music and movies online (-29%), or jewelry and watches (-11%) there are still categories that are pretty healthy despite of the overall negative economic climate.
But the same report actually contains some definitely bad news - those related to expectations US people have for the future of the economy. And in this particularly case expectations can be certainly named fears as 82% of people say they are more fearful about economic future than ever before. And the number of optimists is definitely moderate with only 26% of all respondents mentioning they hope the economy will be better in a year.
For now I think it is way too early to jump to conclusions until we see the results of online retail during the upcoming holiday season. I myself tend to think that online retails have better chances of staying healthy given the advantages like lower overheads can offer to potential customers. Yet the disturbing fears of consumers who don’t even expect anything to change to the better a year from now is something we should definitely be afraid of as scared consumers may damage the situation much worse than real liquidity problems.
