Gartner: 10% of In-Store Spending Moves Online for Holidays

Share this content:
A GartnerG2 report released yesterday projects that in-store purchases will plummet 10 percent this holiday season as shoppers move online.


Consumers scared by terrorist acts, a slumping economy and fears over air travel are expected to shift $1 billion from offline to online retail.


"Part of the shift is really more about economics than just fear," said Geri Spieler, San Jose, CA-based research director at Gartner. "But you don't argue over people's feelings if people have a combination of a fear of travel and economics."


According to GartnerG2 projections, worldwide online holiday shopping will surpass $25 billion this year, up 39 percent from last year. In the United States, online holiday sales are projected at $11.86 billion, up 30 percent.


Estimates of online holiday spending for the United States vary. AC Nielsen is at the top end, projecting $12.4 billion. Jupiter Media Metrix says $11.9 billion, BizRate.com $11.55 billion and Columbus, OH-based Retail Forward $11.5 billion.


Among other players, Forrester Research's forecast for the five weeks leading to Christmas is $11 billion. More conservative, eMarketer pegs holiday online sales at $10.7 billion, Nielsen//NetRatings $9.9 billion for November and December, and Yankee Group $9.5 billion.


In terms of growth, the percentages bandied range from 7 percent for Yankee Group to 30 percent for Retail Forward and 43 percent for Nielsen//NetRatings.


Retail Forward said fourth-quarter online sales will represent 1.8 percent of total core retail sales, excluding the automobile and gasoline channels. This would be up from 1.4 percent last year.


The increased e-commerce activity likely will strain retailers, however. Many multichannel retailers maintain separate profit and loss statements and budgets for their e-commerce divisions. But they may be unprepared for the holiday traffic online.


"The problem is that because the economy took a dip last spring -- this isn't new -- a lot of retailers shelved improvement projects for their online channel that they may have done had the economy not turned down," Spieler said.


This lack of investment may have led to neglect in areas like real-time inventory, relationships with suppliers, quicker page downloads and better replenishment systems, particularly fulfillment.


"We may still get some of those dreaded e-mails that 'We're out of stock,' because they didn't update the inventory and they don't have the ability to reserve an order when I place it," Spieler said. "The bottom line to online buying -- and catalog, but online because it's more instant -- is fulfillment. It's not sexy, it's the truth. It's really what it's about besides the optimized Web design that makes that happen."


Many retailers and analysts say that this year may be the weakest holiday season in a decade for the retail industry. Travel spending may yield to general merchandise and apparel.


And though retailers selling online may see a rise in sales, even they must act to stimulate demand, Gartner said. Online retailers that can respond swiftly to customer demand must shed their remaining fall inventory.


For retailers in general, they need to slash demand forecasts and buying, but still hold some holiday and staple inventory. New suppliers must be lined up as backup for just-in-case scenarios.


But stockpiling inventory or offering discounts is no good in the absence of marketing to turn a travel-weary public into online shoppers.


"The imperatives are, it's a tough economy, you need to get in my face that you have bargains," Spieler said. "And you either do that by e-mail, by mailing or any kind of advertising.


"Because consumers are scared - they really don't want to spend this year," she said. "I'm looking for bargains and am going to send gifts back home. I want to know if they get there on time, and I want to know what kinds of deals you've got, because it's going to be a bargain-basement holiday."


close

Next Article in Digital Marketing

Sign up to our newsletters

Company of the Week

Brightcove is the world's leading video platform. The most innovative and respected brands confidently rely on Brightcove to solve their most demanding communication challenges because of the unmatched performance and flexibility of our platform, our global scale and reliability, and our award-winning service. With thousands of customers and an industry-leading suite of cloud video products, Brightcove enables customers to drive compelling business results.

Find out more here »

Career Center

Check out hundreds of exciting professional opportunities available on DMN's Career Center.  
Explore careers in digital marketing, sales, eCommerce, marketing communications, IT, data strategies, and much more. And don't forget to update your resume so employers can contact you privately about job opportunities.

>>Click Here

Relive the 2017 Marketing Hall of Femme

Click the image above