Online Holiday Sales Are Expected to Rise Sharply

With the crucial holiday shopping season about to begin, there are ominous economic signs on the horizon. High oil prices, a negative personal saving rate and a dip in consumer confidence could cause consumers to tighten their purse strings. In addition, the effects of Hurricane Katrina are still unclear.
Nevertheless, online holiday shopping should continue to log impressive gains. eMarketer forecasts that online sales for the fourth quarter will be $26.2 billion, up 21.9% over last year.
Where will the additional spending come from?
"The coffers of offline retailers," answers Jeffrey Grau, Senior Analyst at eMarketer and author of the Online Holiday Shopping Preview report. "The Internet is ideally suited for the holiday gift-buying season. It offers a convenient and comfortable way to find good values and a wide assortment of products without having to negotiate crowded malls or wait in long lines at the post office. Wild cards such as high gasoline prices and bad weather may even spur consumers to do more of their holiday shopping over the Internet."
The chief reasons consumers are shifting their holiday spending from stores to the Internet relate to convenience, low prices, product selection and fewer hassles.
Data from the annual 2004 eSpending Report, jointly produced by Goldman Sachs, Nielsen//NetRatings and Harris Interactive, noted that for the last several years consumers have shifted a portion of their gift spending from stores to Web sites. In 2004, holiday shoppers spent 22% of their gift budget online compared to 16% in 2002. At the same time, consumers decreased the amount spent in stores to 72% in 2004 from 78% in 2002. The percentage of spending generated by catalogs stayed level over the 2002-2004 period.
Nielsen//NetRatings, in a study commissioned by DoubleClick, attributed an even higher percentage of gift spending to the Internet sales channel during the 2004 holiday season.
"The Internet actually seems to be expanding the holiday season, making it longer," says Mr. Grau. Online retailers expect the online holiday shopping season to begin earlier than the traditional offline holiday season, according to LaGarde, a provider of e-business technology solutions, which surveyed e-retailers in July 2005. Over 25% of respondents believed online shopping would start in August or September and over 60% stated they believed the season would start before November 1st. This extends the holiday season to the full fourth quarter of the calendar year.

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