Retail Expert: Online, In-Store Holiday Sales to Increase

Article ID: 524418

Released: 17-Oct-2006 7:15 PM EDT

Source Newsroom: Purdue University

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Newswise — With gas prices moderating and three in four homes nationwide connected to the Internet, a Purdue University retail expert predicts store and online holiday sales will ring up significant increases this year.

"The outlook is very positive for retailers this holiday shopping season, but that is especially true for e-holiday retailing," says Richard Feinberg, director of the Purdue Retail Institute and Center for Customer-Driven Quality. "Online sales will increase 20 percent this year compared to last year."

He predicts online sales will grow from $20 billion last year to $24 billion this year. Traditional retail holiday shopping nationwide is expected to reach $450 billion or more, or between 4 percent and 6 percent more than last year.

Competition among retail outlets is fierce, Feinberg says, and he predicts holiday sales and promotions aplenty.

Feinberg predicts online shopping will constitute as much as 8 percent of all holiday shopping, and free shipping will be a popular tool for retailers to attract as many holiday shoppers as possible. Research by the Center for Customer-Driven Quality shows free shipping increases the probability that consumers will purchase from a visited Internet site.

"A recent national survey shows 70 percent of consumers indicate that free shipping is a deciding factor for them," says Feinberg, a professor of consumer sciences and retailing who has been making holiday shopping forecasts for two decades.

At retail outlets, merchandisers will lead with discounts and then offer other enticements to bring shoppers back again.

"We will see many and varied promotions, for instance a coupon for a greater discount if you come back another time, in addition to the point-of-sale discount," Feinberg says.

Gift cards, that standby for the person who just doesn't know what to buy, will account for 10 percent of holiday sales. Purchases using gift cards are not included in holiday sales until the cards are redeemed, Feinberg says, and 60 percent of the cards are redeemed after Dec. 25. For that reason, counting of holiday sales does not end until well after the lights have been taken down.

"January is a very important month for holiday sales because of gift cards," he says.

The push to grab the attention of would-be retail shoppers began weeks ago, with the first catalogs hitting mailboxes. Most online consumers are noticing an increase in promotional e-mails as well.

With the growth of online sales, Feinberg says a new term has been added to the shopping lexicon: "CyberMonday" now joins "Black Friday," the traditional start of the holiday shopping season on the Friday after Thanksgiving.

CyberMonday is the first day of the work week following the extended Thanksgiving weekend. That is when shoppers' attention turns from turkey and stuffing to holiday gifts and stocking-stuffers. The run-up to the e-holiday shopping season, starting Nov. 1 and ending on CyberMonday, will see a mushrooming of promotional e-mails, Feinberg says.

And just as e-retail outlets are becoming more aggressive in marketing and promotions, a phenomenon known as search engine optimization is changing the way online shoppers browse the virtual aisles.

"Retailers have begun to understand how consumers use search engines to find items, and they use this knowledge to make sure their merchandise comes up when consumers search," he says. "Ad revenue on Google, Yahoo and other popular search engines is expected to be significantly higher this year."

Enticing online buyers to return and buy again will be a priority, he says, with significant rewards for repeat buying at e-retail sites.

Besides e-mail promotions and click-back rewards, another issue for online retailers is how to get the buyer from the aisles to the checkout.

"About 50 percent of consumers who begin to purchase in an online shopping cart will click out before they finish," he says.

Feinberg's research shows that half of all online sales will be executed from work.

"The prevalence of shopping online at work becomes an interesting productivity issue for employers," he says.

With roughly 50 percent of holiday shopping put off until the two weeks before Christmas, retailers online and off will work hard to bring in early shoppers, Feinberg says.

"Especially for online shoppers, taking delivery before Christmas is important," he says. "So making a list and getting online early should be a high priority."


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