The Internet’s role in the holiday shopping season continues to grow, promising to provide a ray of light in what could be an otherwise dim holiday shopping season.
According to research being released today by Shop.org, which is part of the NRF, and BIGresearch, the Internet will influence 30.2% of holiday sales this year, up from 28.9% last year.
While climbing oil prices, credit burdens and a mortgage crisis are placing significant financial burdens on consumers and dampening holiday sales predictions, industry analysts still predict e-commerce sales will be stronger than comparable sales in bricks-and-mortar locations.
One reason for the Internet’s growing impact on sales over the holiday is the evolving role of Cyber Monday. Cyber Monday refers to the Monday following Thanksgiving, which has evolved over the past few years into the kickoff to the online holiday shopping season much the same way that Black Friday, the day after Thanksgiving, is considered the start of the in-store shopping season. Both are heavily promoted.
Cyber Monday will be “a bigger part of the online holiday shopping phenomenon” this year, said Scott Krugman, VP of public relations at the National Retail Federation. Retail promotional activity is one reason for this. “We are going to see a very aggressive promotional strategy from retailers this holiday season, more so than in previous years,” Krugman said, in reference to both online and in-store sales.
Shop.org’s eHoliday survey, conducted by BizRate Research, shows that 72% of online retailers said they are planning a special promotion for Cyber Monday, up from 43% two years ago. Also,
Shop.org’s Web site, CyberMonday.com, will see 513 retailers participating compared to 400 last year.
The growth of Cyber Monday has to do with the continuing popularity of online shopping, said Ted Vaughan, audit partner at consulting firm BDO Seidman LLP. “Certain sectors, like apparel and luxury, are opening up to online shopping and the traditional online customer is moving beyond someone younger,” he said.
As a result, more retailers are viewing their online sales initiatives as part of an overall marketing strategy.
According to a recent survey from BDO, chief marketing officers of leading US retailers said they are dedicating 14.8% of their total marketing budget to driving Internet sales during the holidays.
The research from Shop.org and BDO paint a slightly different picture in terms of what types of online promotions retailers are favoring this year.
According to Shop.org, e-mail campaigns will be the most popular promotion on Cyber Monday, with 32% of retailers planning to use this strategy. E-mail is followed by specific deals, which 29.9% of retailers plan to offer, one-day sales, which 28.9% plan to offer and free shipping, which 24.7% plan to offer.
BDO’s research indicates that 61% of retailers will be providing reduced prices online during the holidays, 58% free shipping and 53% exclusive items. The average minimum purchase to qualify for free shipping was $43.
CyberMonday.com is Shop.org’s shopping Web site intended to help consumers find the best holiday deals. It was launched last year and received 500,000 visitors in its first two weeks of operations. This year, the site has increased capacity and added an option for shoppers to sign up to receive offers from retailers via e-mail and RSS feeds providing up-to-the-minute updates on deals.
As in past years, many Americans will be doing their online shopping from the office. According to the research, 54.5% of office workers with Internet access, or 68.5 million people, will shop for holiday gifts from work this year. This is up from 50.7% in 2006 and 44.7% in 2005. Men are more likely to shop from work than women (57.3% vs. 51.7%).
Retailers aren’t saving their promotional activity for Cyber Monday, however. The activity will be heavy as well around Black Friday, so called because it is traditionally the first day of the year that retailers’ ledgers move from the red, indicating a net loss, into the black.
“More and more retailers are adopting ‘Midnight Madness’ one-day sale approaches” this year, according to Krugman. The expectation is that since sales weren’t that strong in September and October, there will be some pent-up consumer demand and retailers are hoping to capture this.
Another trend is that a growing number of consumers are “taking Black Friday into their own hands” by getting a hold of information about sales before retailers have released it and posting it on Web sites such as www.bfads.net. “This is driving excitement,” Krugman said.
BDO’s research shows that CMOs predict Black Friday will account for 15.1% of their total holiday revenue.
As usual, consumers continue to push off their holiday shopping until the last minute. CMOs predict that 21.3% of their holiday sales will take place in the final week before Christmas, according to BDO.