9 December 2008

The credit crunch at Christmas is causing no end of hardship for Woolworths plc and Entertainment UK Ltd – both arms of the Woolworths Group. The pair went bust after long-winded financial trouble, leaving other companies feeling the blow.

Music and DVD retailer Zavvi, for example, is missing out on countless Christmas profits as its online shop is unable to trade. Its main supplier was Entertainment UK.

So where do users go when they can’t buy from their first choice of online store?

In this case the answer is: Littlewoodsdirect.com, Yellowmoon.org.uk, HMV.com, Amazon.co.uk and Asda.co.uk.

These five online retailers are bidding on the search term “Woolworths” and reaping the benefits just in time for Christmas – savvy marketing if ever there was. Their sponsored links appear in the Google search results next to the now defunct Woolworths. HMV and ASDA (alongside Play.com) are also bidding on the term “Zavvi”, diverting traffic to their online stores.

HMV received 1.12% more of Woolworths’ downstream traffic on 6th Dec than on 29th Nov with overall visits remaining similar on both occasions. Similarly HMV received over 1.5 per cent more of Zavvi’s downstream traffic on 6th December than a week earlier.

Out of this HMV gains substantially more custom and the brand loyalties of many customers who will go to HMV in the future. This is incredibly detrimental to Zavvi as a music and video retailer and a direct competitor of HMV. It will resume its online trading in time and return to the arena to find a substantial portion of its customer base gone.

In the case of Woolworths, HMV is taking stock of what was the department store’s entertainments department. In offering its services at this crucial time – what with Christmas and the stores’ inability to trade – HMV becomes the e-shoppers choice. Of course this is comparative as the market leader is still Play.com.

Additionally, because these retailers have now established themselves as the alternatives to Zavvi and Woolworths, it makes it substantially more difficult for other online stores to successfully divert traffic.

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