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The Honolulu Advertiser
Posted on: Wednesday, December 28, 2005

Web sales make holidays merrier for many retailers

By John Schmeltzer and Mary Ann Fergus
Chicago Tribune

CHICAGO — A 24 percent jump in Internet sales from last year helped ward off an otherwise lackluster Christmas shopping season for the nation's retailers.

Consumers' growing comfort with Internet shopping coupled with aggressive campaigns promising gift deliveries by Christmas — even if ordered as late as Dec. 23 — helped propel Internet sales to the best showing since online sales records began being tracked in 1999. The electronic sales rose to an estimated $20 billion compared to $4.7 billion six years ago.

Shoppers like Jay Carroll, a 48-year-old commercial insurance broker from Palatine, Ill., helped set the tone. They let their fingers walk across keyboards when shopping for Christmas presents this year rather than gripping their cars' steering wheels while searching for a parking space at an area shopping mall.

"I try to do as much as possible online," said Carroll, who said he used his computer to round up a digital camera for his wife and a skateboard and accessories for his 11-year-old son. "I like the convenience and I'm not a shopper."

Strong Internet ordering helped push the overall retail sales up at least a full percentage point, according to Gian Fulgoni, founder and chief executive of Reston, Va.-based ComScore Networks Inc., which tracks consumer behavior. Sales of gift cards, about $20 billion this year, added another full percentage point to the retail sales, he said.

That's a big boost for retailers who rely on the December holiday shopping season for 25 percent of total sales. This is the time of year their books go from red to black.

MasterCard International's MasterCard Advisors unit said sales, when adjusted for the extra shopping day between Thanksgiving and Christmas, rose an estimated 5.2 percent compared to the same 29-day period a year ago. If you add in the extra shopping day, sales were up 8.7 percent this year.

The adjusted 5.2 percent increase is just short of the 6 percent projected by the National Retail Federation for the Nov. 1 to Dec. 31 shopping period — but it is nearly double the dismal 2.8 percent sales increase that had been recorded halfway through this year's holiday period.

"It was a solid increase this year, but not generally spectacular," said Michael McNamara, vice president of research and analysis for MasterCard Advisors' Spending Pulse, a retail sales data service that tracks sales on the MasterCard network augmented by estimates of spending using cash and checks.

Fulgoni said the growing impact of Internet shopping was especially visible during last week's three-day New York City transit strike. New York and Long Island shoppers turned to the Internet en masse to handle their last-minute shopping.

During the first two days of the transit strike, Fulgoni said his researchers tracked a 28 percent increase in the share of online spending by New York residents.

He said Internet shopping levels could rise dramatically as more stores review how much online sales affected their bottom lines.

Shopping centers across the country said shoppers returned in force on Monday to begin cashing in gift cards or exchanging unwanted presents.

"Retailers have recognized that December has 31 days," said Marshal Cohen, chief analyst at NPD Group Inc., a market research firm based in Port Washington, N.Y., The Associated Press reported.