More Web Shopping Is What's in Store
The retail sector overall may be reporting a sluggish start to the season, but holiday shoppers are scooping up iPods , DVDs, digital cameras and other tech goods at a brisk pace -- and they're scouring the Web for bargains more than ever, with several weeks left in the prime buying season.
A new report says online consumers spent $8.8 billion in November, up 19 percent from the same period last year and 62 percent from 2002 (the numbers exclude travel). While apparel topped the list at $1.5 billion, according to the Goldman Sachs & Co. , Harris Interactive and Nielsen/NetRatings holiday eSpending report , toys and video games -- including hardware and software -- were second at $1 billion, with DVDs and videos in third at $882 million. "The growth in 2004 holiday revenue suggests that consumers are shifting more dollars to the Internet this season," Nielsen/NetRatings analyst Heather Dougherty said in a statement.
"Categories showing the highest growth in holiday spending last month included toys/video games, video/DVDs and music. The toys/video games category grew 43 percent over last year, while the video/DVDs and music categories increased 39 percent and 32 percent," Reuters said in a near-verbatim pick-up of the survey's canned release. * Reuters via washingtonpost.com: Online Sales Jump In November (Registration required)
Not only are sales up for a lot of tech-related products, but online shopping traffic overall has been hot. Before Black Friday -- the day after Thanksgiving and the busiest shopping day of the year -- Nielsen/NetRatings found that online traffic was up 60 percent for the week ended Nov. 14 compared with the prior week. The online research firm "said shopping visits to Web sites in the home and garden, books/music/video, and toys and video games led traffic growth," another Reuters article reported in advance of Thanksgiving. Nielsen/NetRatings' Dougherty said people were going online to research gift ideas and comparison shop.
Another dispatch from the wire service in advance of the holiday rush gave a rosy forecast: "U.S. consumers are expected to spend $16.7 billion online during the holiday months of November and December, an increase of 29 percent from the year-earlier period, according to research firm eMarketer ," the article said. And the Monday after Thanksgiving, Reuters picked up on yet another survey of brisk online sales. "Thanksgiving online spending doubled this year to $133 million and Black Friday sales were up 41 percent to $250 million, said comScore , which has forecast 2004 holiday sales from November and December rising as much as 26 percent year-over-year to $15.5 billion."
From Clicks to Bricks The online traffic and sales surge, however, has not equated to across-the-board pay dirt for big-box retailers and department stores. Target , Wal-Mart , Sears and others have had to focus on selling tech goods -- and cutting prices of some hot items -- to help boost disappointing overall sales.
"Some chains staged successful promotional events in late November as they slashed prices aggressively on wool overcoats, digital cameras and flat-screen televisions. Even so, the forecasts that retailers gave for the crucial month of December were mixed," the Wall Street Journal reported Friday. Tech seemed to be the small silver lining in a lot of other tepid retail news, such as this nugget from the same article: "Although video game sales have been reported healthy at Wal-Mart and specialty chains amid the release of a few new titles, such as Microsoft Corp. 's ' Halo 2 ', there aren't many hot new toys to fuel a big season this year, analysts say." * The Wall Street Journal: Cash Registers in November Weren't Slow Only at Wal-Mart (Subscription required)
The Los Angeles Times on Friday penned its own piece saying weak in-store sales might be a further indication that people are flocking online to purchase goods. "Sales at stores open for at least one year, a key industry indicator, rose just 1.7 percent, compared with 3.7 percent in November 2003, according to a survey whose results were released Thursday. And of the 71 retail chains surveyed, 45 percent reported sales declines," the Times said. "Instead of shopping steadily through the month in a way that builds momentum, he said, people bought in surges spurred by sales, and that made for little 'follow-through' spending. What's more, he said, bricks-and-mortar stores may have lost revenues as more Americans shopped on the Internet." It isn't surprising then that J.C. Penney Co. is among the traditional stores running a TV ad campaign to lure people to its Web site, while Nordstrom, which has stores in just 27 states, is hawking its gift cards in national print ads. * The Los Angeles Times: Early Holiday Sales Weak (Registration required)
Put Your Initials Here Another reason that shopping online might have a leg up on shopping en vivo is consumers' ability to personalize Web-bought gifts. Business Week recently ran an article on the run-up in sales for specialized goods, including sites that sell everything from cookies imprinted with digital pictures to custom-fit clothing from Lands' End .
"Today inscribing initials on luggage or towels seems quaintly old-fashioned compared to what's available on the Web. Thanks to improvements in software that display customized goods online, guide users through the selection process, and automate production, individualizing a gift has gotten far more sophisticated -- and, dare we say, trendy -- this holiday season," the article said. "Of course, not much of this is new except for the variety of choices. Custom-made products have been around forever. ... What's changed is that, thanks to the Web, a broader variety of custom products have become more accessible and affordable. For many goods, the extra fee is only $10 to $20, and delivery time is usually up to four weeks. In the past, custom was necessarily a high-end item. Not anymore. At Target you can order custom jeans for about $35. That's about 50 percent higher than the $23 off-the-rack price, but still hardly a painful premium." * Business Week: Web Retailing Gets Really Personal
Another boost for online sales? More people are looking online to buy luxury goods, from diamonds to cars ( eBay is a hot spot, for example, for buying autos). The New York Times today has a piece on the trend, which has even affected how Tiffany & Co. and other high-end companies do business: "Today, in fact, the most persistent sound in luxury shopping is the mouse click. From now until the end of the holidays, Tiffany.com will receive 100,000 hits a day, roughly equal to the number of people who will visit a Tiffany store," the Times reported. "If mass retailing has been transformed by the availability of better-designed products, like Michael Graves teapots at Target, class has been transformed by technology and a consumer who is as well informed as she is impatient to have the latest gaud. Half the purchases on Neiman Marcus 's Web site are by customers who do not live near one of its actual stores, said Brendan Hoffman , chief executive of Neiman Marcus Direct , which also operates the Web site of Bergdorf Goodman , a Neiman property. Designers who travel the trunk-show circuit, selling their new clothes like Fuller brushes, have long known about the wealth in this country. But the Web has given merchants an unlimited portal to the rich, and changed the meaning of notions like status and exclusivity. 'We're selling Chloé , Manolo Blahnik , Dolce & Gabbana ,' Mr. Hoffman said. 'We see no price resistance on the Web.'" * The New York Times: It's Not Exclusive, but It's Lucrative: Why Luxe Went Online (Registration required