Online Retailers To Have Better Holiday Season

    November 2, 2009

Overall retail sales are expected to show no gain this holiday shopping season, while online retail sales in the U.S. will reach $44.7 billion during the holiday season, an eight percent increase over last year, according to a new report by Forrester Research.

The growth rate represents an increase from 2008, when, on the heels of the global financial crisis, online holiday retail sales in the U.S. grew just five percent. Forrester defines the holiday shopping season as months of November and December.

"Despite the lingering effects of the recession, the online space remains the retail industry’s growth engine," said Sucharita Mulpuru, Forrester Research vice president and principal analyst.
Sucharita Mulpuru
Sucharita Mulpuru
"What’s different this holiday from past years is that online retailers will manage to the bottom line, which will change some of the tactics they have employed in the past."

The National Retail Federation has forecast a one percent decline in overall U.S. holiday retail sales for this year. A recent Forrester survey of more than 4,000 U.S. online consumers found that 94 percent of those who made a purchase online within the past three months plan to continue to buy online this holiday season. Nearly three- quarters (72%) of retailers surveyed in "The State Of Retailing Online," a study done by Forrester in Q3 of this year, say they expect online holiday sales to increase over last year.

According to Forrester, retailers will cut down on automatic free shipping and require price thresholds to qualify for free shipping. In addition, online retailers will use more cross-channel customer service options, advanced merchandizing software that will offer more product information, and improved social networking tools that will allow people to share purchase decisions with friends.

"Tighter offline inventories may benefit the online channel as consumers go to the Web looking for products – and prices – they can’t find in stores this holiday," said Mulpuru.

"Online retailers will be ready for them with a special focus this year on engagement and service."

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