The iPhone 6 and iPhone 6 Plus introduced today offer larger screens, mobile wallets, wireless payment technology, faster processors, higher screen resolutions and more. ...
The range of predictions for growth in online shopping this holiday season range from 7% to 29%. Why the difference: Some researchers are more optimistic about the economy and the aftereffects of the terrorist attacks than others.
Long before trick-or-treaters suit up for Halloween, Christmas is already in the air-in the form of predictions for holiday online retail spending that industry research firms start to put out in October. Forrester Research Inc., The Yankee Group and Retail Forward (formerly PricewaterhouseCoopers’ Retail Intelligence System) all issued online holiday forecasts last month. And their projections for online spending increases this year over last year spread over a range of 22 percentage points, though the same U.S. Commerce Department figures are at the base of all three forecasts. So what gives?
Part of the difference lies in the fact the forecasts can’t be compared on an apples-to-apples basis. The firms disagree in their definitions of what constitutes retail spending, and even the time period holiday spending entails. Retail Forward, for example, forecasts for the calendar-based fourth quarter, as does Yankee, while Forrester makes its holiday projections for the period from Thanksgiving to the end of the year. And while Forrester includes travel in its definition of retail, representing about 27% of online consumer spending, Retail Forward and Yankee don’t.
But defining the category differently doesn’t account entirely for why Retail Forward projects that online holiday spending will grow 29% this year over last year, while Forrester projects 10% growth and Yankee weighs in with 7%. The rest of the answer is that the carefully¯honed forecasting models at each research firm look at many of the same influencing factors but assign them different values. And the analysts may zero in on different variables.
“We’re still relatively optimistic about this one small sector of retail for the fourth quarter, for a number of reasons,” says Retail Forward analyst Mary Brett Whitfield. “For one thing, we’ll see those who have shopped online before go back for the holidays. And it’s still a fairly new channel, so we’ll also see more new shoppers go online.” Whitfield also expects some incremental sales online from shoppers who can’t find hot merchandise in stores turning to the web, then staying online to buy a substitute if failing to find their first choice.
There’s also a feeling among firms that watch consumer behavior that online sales could benefit from the public’s skittishness about spending time in large, crowded shopping malls, given recent terrorist actions (see p. 32).
While Forrester analyst Chris Kelley agrees that there could be some reluctance to shop malls, he notes that Forrester hasn’t actually asked consumers that question. “A lot of other factors make it difficult to say that’s the key,” he says. Kelley notes that security concerns add one more note of uncertainty in an already-dragging economy, but Forrester sees enough positives for the web to predict an increase in online holiday spending, though at 10%, it’s smaller than Retail Forward’s. “Everyone who’s online knows there are good deals to be found on the web and that it’s easier to find them there than by going store to store,” he says. “When dollars are scarce people go looking for the best deals.” And while he has no hard data on it, Kelley believes that online spending may get a lift this holiday from consumers who used credit cards online for the first time to contribute to relief efforts hosted on shopping sites such as Amazon.
At a projected 7% increase this year over last, the smallest online sales increase forecast comes from The Yankee Group. Analyst Paul Ritter says the forecast had to juggle two countervailing factors: a decrease in total retail sales projected by Yankee due to the economy, security concerns and other factors balanced against how the same factors could increase the percentage of sales that happen online. Yankee’s solution was to drop its earlier forecast of Q4 2001 online sales, but only by about 5%-$9.5 billion vs. $10 billion, which dropped Yankee’s growth expectations over last year from 12.3% to 7%.
“We lowered our growth projections for total retail sales, which we think is the thing being affected the most by what’s happening the economy,” Ritter says. ”That does depress online retail sales as well. But we believe there will be a lift in online sales as a percentage of total sales. For those who are shopping at all, we believe more of them will be shopping online. And they’ll be more comfortable with buying bigger-ticket items this year.”
The Garner Group, Jupiter Media Metrix and others had yet to issue online holiday spending forecasts as Internet Retailer went to press. They’re likely to point to an increase in online spending over last year, for the same reasons cited by the other groups, but the details are anyone’s guess. As are the details of the respective forecasting formulas. “The secret is more closely guarded than the Colonel’s fried chicken recipe,” says Ritter.