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[13th November 2008] – We know, it is all doom and gloom and the only light at the end of the tunnel is the flamethrower from the Reserve Bank, yes? Retail is not looking good with less disposable income and a host of skittish consumers out there.

Online retail may be the shining saviour. However, this comes with a caveat, as Jonathan Gluckman of paid search expert, Clicks2Customers, explains.

The retail industry in SA saw a gloomy start to 2008, with Stats SA's figures showing a retail growth rate of only 1,5% year on year, leading up to the traditional holiday boom that turned out to be more of a damp cracker.

Moreover, festive season retail sales (less inflation) went into negative growth for the first time in six years over December last year.

Our online retailers, however, had a joyous time running up to the end of the last year: according to tech researcher, World Wide Worx, more than 20% of 2007's online shopping was done over the holiday period, and they predict it will likely grow.

Good. That is great for the online retailers. And it is also great news for the increasingly complicated network of online businesses operating as service providers to online retailers, both the partners of the online retailer business and the parasites on it, and those in the huge grey area in between - an entire industry of which most traditional retailers have very little knowledge.

This world of 'search engines', 'price comparison sites', 'retail aggregators', 'search affiliates' and other arcane organisations is staggeringly massive, an entire industry in itself, and one that will ultimately drive much of the world's online trade. According to the latest PricewaterhouseCoopers report, search revenue accounted for 44% of Q2 08 revenue, up from 40% in the same period last year, while display ads accounted for just 21% for the same period.

Many of SA's better online retailers already understand the mutualism between them and the 'online search' crowd. Go to Jump.co.za or PriceCheck.co.za and see how they allow you to search for items at the best prices across several online retailers. At the same time, most of our traditional retailers are still trying to work out their own online shopping plans, never mind how they can plug into the crazy new ecosystem of the online space, where day by day, month by month, technologies and business models flourish, wilt, change and mutate.

It is critical that retailers start to build an understanding of the parallel online services industry. They are entirely familiar with their old collaborators the transport and warehousing companies, the ad agencies, flyer distributors, in-store promotional people and others, but to succeed online requires new partnerships with Web marketing specialists, especially those in the search space.

In the US there is a day called 'Black Friday'. It is the first shopping day after the Thanksgiving weekend, in the run-up to the Christmas/Hanukah/what-have-you present and entertainment frenzy, characterised by gridlocked traffic, chock-a-block shopping malls and slathers of 'Black Friday' special offers.

A whole industry has grown up around it, of Web sites providing searchable indexes of promotions of the things people want, in stores close to them. Compared to 2006, last year saw traffic to sites advertising Black Friday specials increasing earlier than ever before, and peaking 52% higher than previously (according to research company Hitwise in mid-November). Searches on the term 'Black Friday ads' are up by 91% from the previous year, and increased by a jaw-dropping 954% since 2005.

Compare this explosive growth in search traffic on independent 'aggregator' sites to the big retailers' own Web sites, which only increased by a moderate 13% over 2006 (Hitwise US Retail 100 Index). Whether retailers like it or not, more and more people are hitting the aggregator sites rather than the 'official' sites.

The big US retailers have mixed feelings about the 'Black Friday' advertising sites, which allow shoppers to cherry-pick the best specials, and also often leak specials that the retailer was hoping to announce when it suited them, but in general they understand that it is better to capitalise from third-party search systems than attempt the impossibility of muzzling them.

There are now three major ways for online retail customers to find what they want: go to a retailer¹s site directly, go to an aggregator/price comparison site, or, most likely, simply use a search engine, such as Google.

This is where Clicks2Customers has built its business, helping clients to turn consumers' clicks in search engines into revenues (It says that it accounted for around $20m over November and December for big retail and travel clients). It is a tricky business, and online retailers are still coming to grips with how to maximise each online customer acquisition method - it is complicated, subtle and changes constantly.

Retailers in SA are facing a massive learning curve: it is not enough to spend millions on an online shopfront, but ignore how consumers are increasingly using the Web. Is it about bigretailstore.co.za, yourshopperguide.co.za, or Google.co.za?

Whether retailers like it or not, Web-savvy consumers are very aware of the power of online search, and how it allows them to find what they want at the best price. And every day there are more Web-savvy consumers in SA. Retail giants need to leverage off the sometimes considerable expertise, energy and effort of third-party sites and affiliates, but without compromising their brands and marketing strategies.

Retailers in this country are currently taking a drubbing, with spiralling food prices and interest rate hikes dampening consumer spending. Online retailers in SA are in the pound seats of growth - even if total retail spend is not increasing rapidly, online spend is becoming an ever bigger slice of the pie. And this is despite the fact that most retailers in SA are still barely off the first page when it comes to building an online sales channel.

Luckily, we don't have to learn from scratch, we can pick up the lessons that US and European retailers have learned so painfully over the past few years. But the time to start learning is now, and the time to start finding strong online partners is yesterday.