October 6, 2010, 3:43 PM

Online holiday sales to increase 15%, National Retail Federation says

But retailers will have to work hard to persuade cautious consumers to buy.

Allison Enright

Editor

Lead Photo

E-commerce sales will increase 15% during November and December over the same months last year, even though uncertainty about the economy may make consumers wait until later in the holiday shopping season to make purchases, says Jack Kleinhenz, chief economist with the National Retail Federation, a trade group.

In a conference call today with journalists and investors, Kleinhenz said that he expects overall retail spending to grow 2.3% during November and December, a significant increase from the 0.4% growth posted during the 2009 holiday season.

Consumers remain unsure of the economy, making them cautious about spending, Kleinhenz said, adding that he doesn’t see consumers emerging from this mindset for some time. Though personal income has jumped by 5.6% this year, consumer spending has increased only 0.4%, he said.

That means retailers have to work harder on promotional campaigns to get consumers to buy. “Retailers have to convince consumers that the recession is over and convince them to spend accordingly,” he said.

A survey conducted in September reports that 35.5% of consumers say they will spend less on gifts this year, said Pam Goodfellow, senior analyst at BIGresearch, during the call. Though that represents more than one-third of consumers, the figure is down several points from surveys conducted at the same time in 2009 and 2008, when the percentage of consumers saying they would spend less hovered near 40%.  “Shoppers are showing improvement from the last two selling seasons, but caution still lingers,” she said.

Comments | 2 Responses

  • I agree with you Allison that retailers will have to work harder on promotional campaigns to get consumers to buy. One of the key areas retailers can focus is shopping cart abandonment – for most ecommerce sites, rates normally average 70 percent, i.e. 7 out of every 10 people that place items in the shopping cart do not complete the transaction. But last year from Labor Day through November 15, the number of online sales fell by almost 56 percent compared with the volume for the previous month, and the shopping cart abandonment rate shot up, peaking at 83 percent. Forrester carried out research on the reasons why people abandon their carts, the top 5 of which ultimately fell into two main categories: price (especially shipping costs) and that they were not ready to buy. The other key aspects to consider however are the emotional reasons for abandoning a shopping cart (in particular, confidence in the brand, service and, if your site is not a global brand, the basic concern of doing business online with an unfamiliar brand). In response to this, SeeWhy has created a holiday season checklist to help keep customers in the shopping cart, especially over the festive period.

  • With online spending expected to exponentially increase, retailers not only have to be savvy with their promotions, but also need to properly test and optimize their sites to serve the most effective content and targeted recommendations to turn browsers into buyers.

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