Merchants Expect Lower Holiday Sales

Survey shows consumers plan to spend more online than in stores.

by staff writer
- Nov 14, 2008

Despite a bad economy, online sales are expected to increase this holiday season. But the seasonal bump may not be as big as last year's.

Overall, sales are expected to increase by 12 percent, according to Forrester Research, an independent technology and market research company. And more than half of retailers—56.1 percent—expect to see a 15 percent increase in sales come the holidays. Still, last year that number was 77.5 percent of merchants, notes the National Retail Federation.

"Online retailers are resilient, but not immune to the challenges of this holiday season," notes Scott Silverman, executive director of, a division of the National Retail Federation.

Sales have already slowed, according to comScore, Inc., a research firm that tracks Internet activity. Its third quarter e-commerce report shows online spending was down 6 percent compared to first-quarter numbers and 7 percent compared to the second quarter.

"Consumers' economic pressures continue to have a significant impact on retail spending, which is evident in the slowing growth rates in the online channel," says Gian Fulgoni, comScore's chairman.

In a comScore survey of more than 1,000 people, 82 percent of participants said they are more afraid of the economy's future than ever. And only 26 percent thought the economy will get better in a year.

Leading retailers have felt the pinch. Gap Inc., Old Navy and Banana Republic saw in-store retail sales drop in September. But online, Gap Inc.'s sales were up 50 percent from 2005 to 2007, and sales should reach $1 billion this year, according to reports.

Online shoppers will be expecting incentives, such as free shipping, discounts and exclusive online deals

"(Online's) the only place you can go for an optimistic outlook" for retail this year, says trends expert Nita Rollins of digital marketing agency Resource Interactive.

Indeed, one recent consumer survey may give merchants a bit of hope. The Consumer Internet Barometer, a quarterly survey of consumer spending habits, forecasts online sales this holiday season to grow 9 percent across retail channels, compared with 1.5 percent growth forecast for the key holiday shopping retail sectors. But online shoppers will be expecting incentives, such as free shipping, discounts and exclusive online deals, according to Lynn Franco, director of The Conference Board Consumer Research Center, which led the study.

Bright spots

There are still items that are in high demand. Video games, consoles and accessories increased in sales by 60 percent compared to last year. Furniture, appliances and equipment were up by 52 percent. But toys and apparel are not as popular as they were a year ago. They saw a decrease in sales of 2 and 3 percent, respectively. Music, movies and videos were the hardest hit, dropping 29 percent.

Still, online sales continue to surpass those of bricks-and-mortar retailers. Gas prices could be one reason. In a survey, 23.1 percent of participants said gas prices were the reason they're surfing the Web for bargains instead of driving to their local mall. About 20 percent said they simply had less money to spend this year, leaving online sellers grappling to come up with new ways to attract buyers.

Some online retailers told said they will offer free shipping to get customers' attention. Others are adding videos and Facebook pages to attract buyers and increase sales. But 21.3 percent also said they would increase minimum purchase requirements this year, according to's Silverman.

"It's challenging to keep up those really high growth rates," he notes.

About the Author

Auctiva staff writers constantly monitor trends and best practices of those selling on eBay and elsewhere online. They attend relevant training seminars and trade shows and regularly discuss the market with PowerSellers and other market experts.

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