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Online Clothing Sales Surpass Computers, According to Shop.org/Forrester Research Study

For Immediate Release
Kathy Grannis or Ellen Davis (202) 783-7971
grannisk@nrf.com or davise@nrf.com 
Forrester Research: Tracy Sullivan (617) 613-6023
press@forrester.com  

Online Clothing Sales Surpass Computers,  According to Shop.org/Forrester Research Study
- Total Online Sales Expected to Hit $259 Billion in 2007- 

Washington, May 14, 2007— As the Internet grows up, computers have moved over to make room for clothing at the top of the sales list. According to the first part of The State of Retailing Online 2007, the tenth annual Shop.org study conducted by Forrester Research, Inc. (Nasdaq: FORR) of 170 retailers, Americans last year spent more online on clothing than they did on computers for the first time in history. The report found the apparel, accessories and footwear category reached $18.3 billion in 2006 and is expected to hit $22.1 billion in 2007. This year, 10 percent of all clothing sales are expected to occur online. 

“Apparel retailers have overcome a number of hurdles to encourage shoppers to buy clothing and accessories online,” said Scott Silverman, executive director of Shop.org. “Retailers are doing such a great job online that in some cases it’s easier to find and buy clothing on the web than it is in a store.”  

The report suggests that the apparel and accessories category has experienced strong sales because of an influx of new companies and liberal shipping policies such as free shipping on returns and exchanges. Additionally, apparel and accessories retailers are integrating new technologies onto their sites including rich imaging, where customers can zoom and rotate merchandise or see the item in different colors before buying, all of which eases the mind of a customer who is hesitant to purchase apparel online. 

Computer hardware and software, long the frontrunner for non-travel online sales, moved into second place in 2006 at $17.2 billion, followed by sales of autos and auto parts ($16.7 billion) and home furnishings ($10 billion). 

Online Sales to Soar Again this Year
According to the report, 2007 online sales (including travel) are expected to rise 18 percent to $259.1 billion. Sales excluding travel will reach $174.5 billion. This strong growth will come off of an impressive performance in 2006. Online sales last year rose 25 percent to $219.9 billion. Excluding travel, online retail sales rose 29 percent to $146.5 billion, representing six percent of total retail sales in 2006.* 

“As consumers flood the web to purchase merchandise and research products, online retail is moving full speed ahead,” said Sucharita Mulpuru, Forrester Research senior analyst and lead author of the report. “This strong growth is an indicator that online retail is years away from reaching a point of saturation.” 

Another sign that e-commerce has come of age is that profitability throughout the sector has stabilized. Eighty-three percent of respondents to the survey reported profitability and 78 percent said they were more profitable than 2005. Profit as a percentage of revenue did not change, the report notes, because revenue and expenses grew as well. 

The second part of the study, which will examine tactics that online retailers found most successful and site features that resonated most with online consumers, will be released in September at Shop.org’s Annual Summit. 

About Forrester Research

Forrester Research, Inc. (Nasdaq: FORR) is an independent technology and market research company that provides pragmatic and forward-thinking advice to global leaders in business and technology. For more than 23 years, Forrester has been making leaders successful every day through its proprietary research, consulting, events and peer-to-peer executive programs. For more information, visit www.forrester.com.  

About Shop.org

Shop.org is the network for retailers online. Its 600 members include the 10 largest retailers in the U.S. and 70 percent of the Internet Retailer Top 100 E-Retailers. It's where the best retail minds come together to gain the insight, knowledge, and intelligence to make smarter, more informed decisions in the evolving world of the Internet and multichannel retailing. Founded in 1996, Shop.org became a division of the National Retail Federation in January 2001. Shop.org programs and activities include benchmarking research, events and networking communities.  

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* “Retail Sales” exclude travel and include the following categories: apparel, accessories, and footwear; computer hardware and software; autos and auto parts; home furnishings; consumer electronics; music and video; appliances and tools; office supplies; sporting goods and apparel; books; toys and video games; gift cards and gift certificates; event and movie tickets; food, beverage, and grocery; jewelry; flowers and cards; over-the-counter medicines and personal care; computer peripherals; baby products; cosmetics and fragrances; and pet supplies. These are not the same categories that the National Retail Federation tracks; therefore, the numbers are not comparable.