Tuesday, June 17, 2008

U.S. online retail sales becoming a bigger, positive rating factor - Moody's

MUMBAI (Thomson Financial) - Moody's Investors Service said internet retail sales have reached the point where a retailer's internet strategy is crucial to its success, because it represents an important channel of distribution and can mitigate declining comparable-store sales trends.

The ratings firm noted that online sales are one of the few bright spots for specialty retailers currently.

Moody's said it expects conditions to continue to induce consumers to spend more over the Internet at the expense of the brick-and-mortar stores. Moody's said while investors have long been dazzled by the double-digit growth of online sales, the channel still only accounts for about 4 percent of retail sales, according to the U.S. Census Bureau.

But that percentage has reached finally sufficient mass to be important to many ratings, with the Census Bureau placing sales in 2007 at over $136 billion, it added.

The strength of the online channel will benefit retailers that focus solely on the Internet, such as Amazon.com Inc. and retailers that have a sizable online presence, such as Wal-Mart, J.C. Penney, J.Crew, Neiman Marcus, Macy's, and Limited Brands. TFN.newsdesk@thomson.com pvi/ssa via hemscott

Jason Kiwaluk

Mower & Shoveller,

Ecommerce | Adtech | Innovation | Strategy

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