Online Retail Sales Set to Grow 8%, But US Consumers Plan on Spending Less Overall

The holiday shopping season looks to be a mixed bag, as Forrester Research expects online retail sales to grow and the National Retail Federation (NRF) forecasts a decline in U.S. consumer spending.

Forrester expects online holiday retail sales to grow to $44.7 billion this year, an 8 percent boost from last year’s $41.4 billion. This corroborates the trend of more shopping transactions moving to the Internet.

“Despite the lingering effects of the recession, the online space remains the retail industry`s growth engine,” said Sucharita Mulpuru, e-commerce analyst at Forrester.

“As consumers will continue to be responsive to discounts, online retailers plan to implement pricing, marketing, and merchandising strategies that will secure their bottom line,” she adds.

According to the report, titled “US Online Holiday Retail Forecast, 2009,” 94 percent of those who have purchased products and services online in the past three months also plan to buy products and services online this holiday season, up from 92 percent last year.

A Shop.org study conducted by Forrester titled “The State of Retailing Online 2009” also reported an expectation that online holiday sales would increase this year compared to last.

However, not all retailers will benefit equally. Forrester notes that large- and medium-size retailers will be less vulnerable than small retailers, as the latter group has less financial resources and marketing power.

Also, product mix will affect the success retailers have, as some will sell better than others. Apparel and accessories, for instance, will do better than home goods during the holiday season.

Mass merchandisers like Wal-Mart will do better than other retailers, driven primarily by the weak economy. Twenty-four percent of online holiday buyers hope to try out lower-cost brands to the typical brands they purchased in the past, and 33 percent plan to visit mass merchandisers.

Meanwhile, offline catalog businesses are expected to struggle this holiday season. Forrester’s survey data shows that just 2 percent of online holiday buyers intend to use offline catalogs for their 2009 holiday purchases.

Online retailers will be keeping leaner inventories, use limited-time and limited-quantity sales as opposed to overall percent-off sales, increase consumer engagement, offer better online customer service, and improve their merchandising and social shopping tools.

Forrester concludes by suggesting that online retailers “leverage multichannel strategies to make up for tight inventories” and “spot areas of cost efficiencies.”

NRF’s recently released 2009 Holiday Consumer Intentions and Actions Survey, conducted by BIGresearch, found that U.S. consumers plan to spend an average of $682.74 on holiday shopping this year, down 3.2 percent from the $705.01 spent last year.

Nearly two-thirds of Americans say the economy will affect their holiday shopping plans, which is no surprise.

“This holiday season will be a bit of a dance between retailers and shoppers, with each group feeling the other out to understand how things have changed and how they must adapt,” said Tracy Mullin, president and CEO of NRF, in a statement.

A large chunk, or 70.1 percent of holiday shoppers will make purchases from discounters this year, and 55.8 percent will shop at department stores. Meanwhile, 45.0 percent will shop at grocery stores, 42.4 percent will shop online, 33.8 percent will shop at clothing stores and 31.8 percent will shop at electronics stores.

Sources:</strong

http://www.forrester.com/Research/Document/Excerpt/0,7211,55548,00.html?cm_mmc=Forrester-_-RSS-_-Document-_-55548&src=RSS_CustomFeed

http://www.internetretailer.com/dailyNews.asp?id=32356

http://news.cnet.com/8301-1001_3-10388239-92.html

http://www.nrf.com/modules.php?name=News&op=viewlive&sp_id=806