Online retail spending in October 2008 grew only 1% over October 2007, according to comScore’s monthly retail e-commerce sales estimates – marking the lowest monthly growth rate since comScore began tracking e-commerce in 2001 – reports Retailer Daily.
The overall softness in online retail spending was precipitated by curtailed spending across mid- to lower-income segments, with households earning less than $50K/year exhibiting negative spending growth compared with a year ago.
Six Consecutive Months of Slowdown
US retail e-commerce growth rates have fallen from a height of 28% in August 2007 to just 1% in October 2008. October was the sixth consecutive month this year of slowing growth rates.
Negative Growth among Lowest Income Earners
A three-month trailing average of retail e-commerce spending reveals that the low and middle-income segments are responsible for much of the softness:
- Overall, online retail spending from August through October grew just 4% versus year ago, with spending declining by 3% among households making less than $50K/year.
- Households with income between $50K and $100K showed marginally positive spending growth (1%).
- Households making at least $100K increased their spending at a healthy rate of 14%.
Shift in Economic Concerns
comScore also conducted surveys in July and October that reveal a marked shift in consumers’ top economic concerns.
Specifically, while rising prices remained the top overall economic concern in October, consumers have become increasingly worried about unemployment/job security and the health of the financial markets:
- Households earning at least $100,000 indicated that the state of the financial markets was their biggest economic concern, with a sharp increase from 14% in July to a 49% in October.
- Those earning less than $100,000 showed marked increases in concern about unemployment and job security.
“It’s clear that worry, concern, and even fear are the prevailing consumer sentiments at the moment, and this is causing all income segments to pull back their spending,” said comScore chairman Gian Fulgoni.
“With the financial markets still volatile and more job cuts looming, it would appear the only near-term ray of hope for this year’s holiday shopping season is that the sharp drop in oil prices will cause an easing in inflation and provide a much needed boost in consumers’ spending power.”