Ready, set, shop

By MARCELLA S. KREITER  |  Nov. 27, 2002 at 11:32 AM
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Mall rats may find a bit of extra elbowroom as the holiday shopping season fires up.

Purdue University retail expert Richard Feinberg Wednesday predicted one of the weakest holiday retail seasons in a decade but, he said, that prediction does not apply to Internet retailers.

"Internet retailers have been slowly and carefully building databases of information about their customers," the consumer sciences and retailing professor said. "This information comes into good use as e-tailers are engaging in attractive e-mail marketing to that customer base."

Feinberg, the director of the Center for Customer-Driver Research, said Christmas e-commerce likely will total $16 billion to $19 billion, about 5 percent to 6 percent of total holiday spending, up 25 percent over the 2001 holiday season. That compares with an expected 2 percent increase among traditional stores without Internet outlets. Part of the increase can be attributed to increased access to computers among consumers, up 10 percent to 15 percent.

"The real winners this season are the multi-channel retailers -- those that have both Internet and store sites," Feinberg said. "Consumers tend to do research on a Web site and then go in to purchase the item in the store."

The Commerce Department reported Internet sales totaled $11.06 billion for the third quarter, up from $10.24 billion in the second quarter.

Tuesday, comScore Networks reported online sales last week reached $1.6 billion, up 53 percent from a year ago. Spending on non-travel goods and services increased to $988 million, an increase of 36 percent. The only category that showed a drop in sales over last year was computer hardware.

"Overall, online sales continue to be strong, but the softness we're reporting in sales of computer hardware is consistent with overall expectations of the tech sector," said Michelle David Adams, comScore Networks vice president.

To boost sales, many e-tailers are offering free shipping.

The average consumer is expected to spend as much as $244 on the Internet, with the most action expected on, eBay, Yahoo, msn eshop and J.C. Penney, center research showed. And most e-shoppers are expected to make their purchases online from work where they have the fastest connections.

An AOL survey indicated 64 percent of the 6,976 online shoppers surveyed said they planned to buy more online this season, expecting to spend an average $298.

Online shopping is most popular among San Franciscans, followed by residents of Nashville, Philadelphia and Sacramento, Calif., Nielsen/NetRatings reported.

The United States isn't the only place where e-commerce is growing. Australian businesses report doubling their e-sales between December 2000 and last June while in Britain, e-tailers report 70 percent of those who browse online made a purchase, according to Nielsen/NetRatings.

A marketing strategy firm predicts most consumers will be packing the aisles of discount stores such as Kmart, Wal-Mart and Target. A survey by Madison Direct Marketing of Greenwich, Conn., found 79 percent of consumers plan to do their holiday shopping at discounters.

The move toward virtual shopping prompted some stores to get the season started early. About 24 percent of Michigan retailers already have rolled out holiday promotions.

"Retailers want to get this crucial sales period off to a strong start," said Larry Meyer, chairman of the Michigan Retailers Association, especially since there are only 26 shopping days until Christmas this year.

A Conference Board survey released this week showed the families are expected to spend an average $483 on gifts this season up from $462. That's a fraction of the total estimated by American Express and Deloitte & Touche, which put the household averages at $1,564 and $1,625, respectively.

However, all three surveys agree retail sales should increase about 5 percent over last year.

"Continued discounting by retailers, both online and in the stores, is likely to prop up Christmas spending," the Conference Board said.

New Englanders are expected to be the loosest with the buck, followed those living in Kentucky, Tennessee, Alabama and Mississippi.

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