What had been a concern before Hurricane Katrina is now becoming a worry—spiking gasoline prices could curtail holiday spending. But the high prices could turn out to be a boon for online retailers. “With high gas prices, people are less likely to spend time driving around to malls,” Bernard Baumohl, executive director of the Economic Outlook Group, tells InternetRetailer.com. “Online will be the biggest beneficiary of high gas prices.”
Gasoline prices are the latest in a series of bad news, Baumohl says. “Rising interest rates, gas prices going up all year, people not saving much money, minimal wage growth and now this which will lead to higher heating costs this winter—something has to give,” he says. “One of the things that consumers will give up is non-essential driving. They won’t be going to shopping malls if there is another option.”
That option is online shopping, he says. “We could very well see e-commerce sales grow at a rate that we’ve never seen before,” Baumohl says. “We could easily see 35-40% increases.”
Even if the total amount that consumers spend on holiday gifts doesn’t grow, the proportion they spend online will grow, Baumohl says. “Overall spending will be much weaker while online sales will do much better,” he says.
Baumohl adds that from an investment point of view, the companies that serve online retailers might be good bets. “Companies that help retailers build up the infrastructure for e-commerce will do well,” he says.
A survey last week by Shopzilla/BizRate reported that high gas prices will cause 40% of consumers to shop more online this holiday season than they did last year.
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