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Forrester: Economy to Significantly Slow U.S. Online Holiday Sales

U.S. online retail sales this holiday season will reach $44 billion, a 12% increase over last year and the slowest growth rate to date - indicative of the difficult economic environment affecting formerly more resilient web buyers, according to a Forrester Research report, writes Retailer Daily.

“This is going to be a very competitive online shopping season, so retailers should take immediate steps to bolster their customer retention strategies in order to ensure repeat purchases,” said Forrester Research Principal Analyst Sucharita Mulpuru.

The majority of holiday online sales will be driven by shoppers who have previously purchased online, rather than first-time online buyers, according to the report, titled “Outlook for U.S. Online Holiday Sales, 2008.”

Although U.S. consumers are pessimistic about the health of the economy, they express a marked interest in the ability of the web to save them money: view chart.

• 48% of consumers surveyed, compared with 41% in 2007, said they can find the best values and deals online.
• 36% of consumers said they would be more likely to shop online due to high gas prices, compared with 22% who expressed the same sentiment last year.

“While e-commerce has traditionally been resistant to negative offline trends, growing concerns about the stability of the economy are finally affecting consumers’ online shopping decisions,” Mulpuru said.

Additional findings from the study:

• More than two-thirds of consumers surveyed said they are planning to spend more or about the same online as they did last year. 27% said they will spend a little or much more online; 26% said they will spend a little less or much less.
• Core holiday product categories will remain top choices for online buyers; for example, apparel and accessories is on the buying list of 75% of online holiday shoppers. Books, DVDs/videos, music, gift certificates, and toys also remain popular.
• Respondents also indicated that they will be seeking free shipping offers more often this year than last:
  • Some three in four online shoppers said they prefer to buy from online retailers that offer free shipping
  • Nearly six in ten said shipping prices deter them from buying online.

“A main attraction of the online shopping environment is the breadth of information that it offers,” said Forrester Research vice president and research director Patti Freeman Evans. “Retailers should expand their use of online marketing tactics on search engines and comparison-shopping sites since shoppers are likely to be researching the Web more thoroughly when deciding on this year’s holiday gifts.”

About the study: This year’s annual holiday forecast was a collaboration between Forrester Research and JupiterResearch, now a Forrester Research company. Two surveys were conducted to measure the attitudes and expectations of online consumers during the upcoming holiday shopping season, defined as the months of November and December. The first survey was fielded in September 2008 and received 2,153 individual responses. The second survey was fielded in early October 2008 and received 1,042 individual responses.