HITWISE UK: RETAIL UPDATE

Marks & Spencer, HMV.co.uk and Woolworths Among Top Performers Online at Christmas -- as well as Google and Yahoo!

London, 11^th January 2007

Hitwise, the leader in online competitive intelligence, today releases its monthly data for visits to retail websites in the UK over the Christmas period, revealing that High Street retailers such as Marks & Spencer, HMV.co.uk and Woolworths were among the top performers online in December. Hitwise analysis reveals that Google and Yahoo! were also among the star performers.

This week, Stuart Rose used the 'R word' (recovery) for the first time to describe Marks & Spencer's performance and Hitwise data reveals that the share of UK internet visits to the retailer were up 25% year-on-year in December, supporting the brand's strong online trading, reportedly up 70%. Advertising and strong offers from Woolworths, Marks and Spencer and HMV.co.uk in particular seem to have driven the growth in visits to these websites.

Google and Yahoo! were also winners at Christmas, with search engines accounting for 36% of upstream visits to retail websites, representing a 20% increase year-on-year. This growth was led by Google and Yahoo! Search. Google (combined UK and dot com properties) accounted for 28% of upstream visits to retail websites in December, up 28% year-on-year. Yahoo! Search (combined UK and dot com properties) accounted for 2.4% of upstream visits, up 60% year-on-year. Both Google UK and Yahoo! UK & Ireland Search sent one in five of their own visits to retail websites in December.

In September, Hitwise issued a series of predictions for Christmas retailing online. Below we review those predictions with what actually happened.

Prediction: Share of category visits will rise 8% year-on-year

In December 2006, visits to the Hitwise Retail Index (an index of 100 leading retail websites) were up 5% year-on-year, cementing a strong year for online retail in the UK. This is slightly lower than the 8% we predicted in September.

Prediction: High Street retailers will continue to make gains against pure-play providers

High street retailers were among the biggest gainers this Christmas, experiencing some of the largest increases in market share of UK internet visits among the top 100 retailers. In particular, market share of UK internet visits increased year on year in December by:

•       +25% for Marks and Spencer

•       +26% for Woolworths

•       +58% for HMV.co.uk

•       +23% for John Lewis

•       +107% for Waitrose

Prediction: More last minute shopping

Hitwise predicted that whilst visits to retail websites would again peak in the second week of December (week to 9^th December 2006), the peak would straddle the second and third weeks, as opposed to the first and second weeks as they had in 2005. Visits did peak in the week to 9^th December 2006 and whilst they declined slightly the following week, remained stronger than they had in 2005, reflecting the trend to more last minute shopping.

Prediction: Search Engines will Account for 35% of upstream visits to retail websites

As mentioned above, in December 2006, search engines accounted for 36% of upstream visits to retail websites, representing a 20% increase year-on-year. We also predicted that this growth would be led by Google and Yahoo! Search and indeed, as described above, Google accounted for 28% of upstream visits to retail websites in December, up 28% year-on-year, and Yahoo! Search accounted for 2.4% of upstream visits, up 60% year-on-year