US Retailers Reach For Online Lifeline

11 February 2008

NEW YORK: As US consumers rein-in their spending, retailers are seeking to offset the decline in dollar revenues by wooing customers from further afield via the worldwide web.

Several high-end stores, including Neiman Marcus and Bergdorf Goodman are set to begin shipping north to Canada this spring and plan to send goods to more distant destinations next year.

Other popular US brands such as Abercrombie & Fitch, Timberland apparel, leather goods vendor Coach and Macy's department stores are also mulling joining the ranks of international online retailers.

Overseas shoppers, especially those from the UK and the Eurozone whose currencies are enjoying strength against the dollar, are particularly attracted by the relative bargains available from the US.

Luxury department store Saks Fifth Avenue has already trialled international shipping and claims overseas buyers, mainly in Canada and the UK, spend 20% to 30% more per order than domestic consumers.

A survey by online trade group last year revealed that 41% of retailers operated internationally, while another 38% said they were planning to do so during 2008.

Comments Forrester Research analyst Sucharita Mulpuru: "Everyone wants to jump on the 'dollar-is-weak bandwagon,' but it is fraught with challenges."

Among the obstacles retailers must overcome on route to successful overseas operations are the tax and duties liabilities of international consumers.

They must also take account of shipping costs versus distribution centers; payments in different currencies, merchandising to different tastes, and managing higher returns in some countries.

Data sourced from Wall Street Journal Online; additional content by WARC staff