honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser
Posted on: Saturday, December 30, 2006

Record online holiday sales

By Chris Serres
(Minneapolis) Star Tribune

America Cubias, left, and Bhupinder Jaggi gift-wrap books ordered from the barnesandnoble.com Web site at the Barnes & Noble Distribution Center in Monroe Township, N.J.

ADVERTISER LIBRARY PHOTO | November 2006

spacer spacer

MINNEAPOLIS — It was days before Christmas, and all through the nation, people were clicking their mouses, buying gifts online without leaving their houses.

A last-minute burst of online shopping in the final run-up to Christmas helped lift holiday retail sales to a record $24.7 billion, up 26 percent from $19.6 billion a year ago, according to ComScore Networks, a Reston, Va.-based research firm that tracks online sales.

Much of the increase occurred in the final two weeks before Christmas, as retailers went out of their way to accommodate procrastinating shoppers by guaranteeing prompt deliveries and pickup service. "It shows that online buying has reached a high comfort level with consumers when they are willing to do this much shopping late in the season," said Gian Fulgoni, chairman of ComScore.

The Internet has been the one bright spot for retailers this holiday season. Overall, sales were dragged down by declining home values, high energy prices and a dearth of must-have toys.

Consumer spending between Thanksgiving and Christmas rose a modest 3 percent over the year-ago period, after adjusting for the extra shopping day this year. Many retail analysts, including the National Retail Federation, had predicted a holiday sales gain of at least 5 percent. Retail sales rose 1.7 percent last week, the slowest weekly pace since February 2005.

However, shoppers were more willing to buy items at the Internet sites of traditional brick-and-mortar retailers, which partly explains the surge in online spending. Target Corp. and Best Buy Co. Inc. each saw their online sales increase by more than 50 percent, according to ComScore. Six of the nation's top 10 busiest Internet sites this holiday season were retailers that have standalone stores, such as J.C. Penney, Victoria's Secret and Circuit City. Barnes & Noble.com launched several Internet-only promotions, such as a free travel bag with a $75 purchase, 50% off certain DVDs, and a two-for-one offer on special-collection books.

One reason is that traditional retailers are doing a much better job catering to procrastinating shoppers. Best Buy, for instance, guaranteed that shoppers could pick up last-minute items ordered as late as 3 p.m. Christmas Eve, a Sunday. Circuit City guaranteed that items would be ready for pickup within 24 minutes after they were purchased online, or would give customers $24 back.

All told, 38 percent of the nation's retailers guaranteed delivery of products by Christmas provided they were purchased before Dec. 18, up from 19 percent from a year ago, ComScore said. "We've come a long way from four or five years ago, when a number of people complained that their gifts didn't get there in time," Fulgoni said.

Even so, Internet shopping still represents a small percentage of retailers' overall sales for the season. This year, online sales accounted for 7 percent of total sales, up from 6 percent a year ago.