This year was never expected to be a big Christmas for retailers, and as it turns out, it wasn't, and for all the reasons one would expect, from the bum housing market to rising gas prices.
Offline sales will be lucky to hit the 4 percent growth forecast by the National Retail Federation, making it one of the weakest of recent years.
Of course, online will come in much stronger. ComScore, the internet research outfit, has put out a preliminary growth estimate of 19 percent over last year for online retail sales from Nov. 1 to Dec 27.
That's about what forecasters had expected, and yet that's down dramatically from last year, when sales grew 26 percent. Says Andrew Lipsman, senior analyst at comScore: “It is clear that we saw a 7 percent decline versus last year. That’s pretty notable."
The big question is why. Is online retail finally maturing? Were online consumers spooked by the economy?
While these two forces appear to have played some role, the answer appears to be one of proportion, reflecting the larger base this year compared to last. The actual growth this year versus last was about the same in terms of new dollars spent. But in percentages it was slower because those new dollars came off this year's larger base.
As Patti Freeman Evans, a senior analyst at JupiterResearch, explains it, "The lower percentage increase is a matter of mass rather than any kind of slowdown. This has been true over the last few years as the growth rate has declined but not the dollars. This is the trend of a market that is pretty big.”
Last year, holiday online spending came in at $24.6 billion, up $5 billion over 2005, and this year spending is expected to come in at $29.5 billion, up nearly $5 billion over last year, according to comScore.
And while there are signs online retail is maturing, she says it's still some time off, noting that online shopping still continues to attract significant numbers of converts in a way that is more new market than mature market.
Freeman Evans believes the holiday growth rate will hit 20 percent, and of that she expects six percentage points will come from people who were brand new to online shopping. The other 14 percent will be from increased spending from existing online shoppers.
“We expect it to show signs of maturing in 2010 or 2011 or 2012, where we will see annual increases dip below two digits,” she says. “That will show us that we are beginning to mature.”
As for whether economic conditions hit online retail sales, opinions were split.
Sucharita Mulpuru, a principal retail analyst for Forrester, is not convinced that the growth rate will be much lower this holiday season than last, but if it is, she doesn’t believe it’s due to the economy. That’s because online shoppers are generally far less affected by adverse economic conditions than the general population.
Freeman Evans agrees. “Most of the spending comes from people that are much more affluent than average consumers. They tend to be a bit more insulated from the pressure of the market,” she says.
But ComScore’s Lipsman believes the dicey economy has had some effect.
When he looked at the spending by income segments, spending for the highest bracket -- $100,000-plus — was up 28 percent this holiday period. That compares to 17 percent for the $50,000 to $100,000 bracket and 10 percent for those earning $50,000 or less.
“This illustrates where the economic pinch was felt within the different segments,” he says.
Meanwhile, in online ratings for the week ended Dec. 23, according to Nielsen Online, Google claimed the top spot among parent companies, followed by Microsoft, Yahoo, Time Warner and News Corp. Online. The top five brands were Google, Yahoo, MSN/Windows Live, Microsoft and AOL Media Network.
NexTag was the No. 1 advertiser with 6.4 million impressions, followed by No. 2 HSBC Holdings at 4.2 million. With just over 37 million ads served, Yahoo was again the top advertising site, well ahead of No. 2 MySpace at 4 million.
Sessions per person per week were down one from the previous week to 16, and domains visited per person were down two to 38. PC time per person slumped more than 8 percent compared with the previous week, to 16 hours and 42 minutes.
|
Top 25 parent companies
Through Dec. 23 |
|
#
|
Parent
|
Unique Audience (000)
|
Reach %
|
Time Spent per Person (hh:mm:ss)
|
|
1
|
Google
|
88,089
|
63.0
|
0:33:04
|
|
2
|
Microsoft
|
86,208
|
61.7
|
0:41:16
|
|
3
|
Yahoo!
|
77,934
|
55.8
|
1:03:47
|
|
4
|
Time Warner
|
68,812
|
49.3
|
1:21:15
|
|
5
|
News Corp. Online
|
42,597
|
30.5
|
0:50:35
|
|
6
|
eBay
|
33,861
|
24.2
|
0:50:04
|
|
7
|
Amazon
|
29,116
|
20.8
|
0:15:37
|
|
8
|
InterActiveCorp
|
27,531
|
19.7
|
0:12:23
|
|
9
|
Apple Computer
|
24,709
|
17.7
|
0:31:18
|
|
10
|
Wikimedia Foundation
|
21,814
|
15.6
|
0:07:54
|
|
11
|
Landmark Communications
|
20,172
|
14.4
|
0:08:52
|
|
12
|
AT&T Inc.
|
19,764
|
14.2
|
0:19:49
|
|
13
|
Walt Disney Internet Group
|
18,653
|
13.4
|
0:19:20
|
|
14
|
New York Times Company
|
18,281
|
13.1
|
0:10:18
|
|
15
|
RealNetworks, Inc.
|
17,041
|
12.2
|
0:21:49
|
|
16
|
E.W. Scripps Company
|
15,418
|
11.0
|
0:06:34
|
|
17
|
Wal-Mart Stores
|
14,127
|
10.1
|
0:09:31
|
|
18
|
Bank of America
|
13,416
|
9.6
|
0:20:44
|
|
19
|
Verizon Communications
|
13,163
|
9.4
|
0:17:13
|
|
20
|
Comcast Corp.
|
13,057
|
9.3
|
0:28:56
|
|
21
|
Target Corp.
|
12,340
|
8.8
|
0:05:58
|
|
22
|
Viacom Digital
|
12,273
|
8.8
|
0:27:13
|
|
23
|
CNET Networks
|
11,417
|
8.2
|
0:06:16
|
|
24
|
Facebook
|
11,041
|
7.9
|
0:35:38
|
|
25
|
United Parcel Service
|
10,871
|
7.8
|
0:10:21
|
|
Source: Nielsen Online
|
|
Top 25 brands
Through Dec. 23 |
|
|
Parent
|
Unique Audience (000)
|
Reach %
|
Time spent per person (hh:mm:ss)
|
|
1 |
Google
|
80,090
|
57.3
|
0:25:14
|
|
2 |
Yahoo!
|
77,079
|
55.2
|
1:04:02
|
|
3 |
MSN/Windows Live
|
62,104
|
44.5
|
0:40:04
|
|
4 |
Microsoft
|
56,487
|
40.4
|
0:18:16
|
|
5 |
AOL Media Network
|
56,242
|
40.3
|
1:30:17
|
|
6 |
Fox Interactive Media
|
36,776
|
26.3
|
0:54:37
|
|
7 |
YouTube
|
32,799
|
23.5
|
0:22:32
|
|
8 |
eBay
|
28,512
|
20.4
|
0:52:44
|
|
9 |
Apple
|
24,709
|
17.7
|
0:31:18
|
|
10 |
Amazon
|
24,295
|
17.4
|
0:15:55
|
|
11 |
Wikipedia
|
21,628
|
15.5
|
0:07:53
|
|
12 |
Weather Channel
|
|
