October 31, 2005, 12:00 AM

Holiday web sales will rise 25% to $18 billion: Forrester

Online holiday sales will increase 25% to $18 billion this holiday season, despite falling consumer confidence and higher gas prices, Forrester Research says in a new report.

Online holiday sales will increase 25% to $18 billion this holiday season, despite falling consumer confidence and higher gas prices, according to a new report from Forrester Research.

While some retailers speculate that rising gas prices will drive shoppers to the web, Forrester says the typical web shopper-who has an average household income of $68,000-will have less discretionary income to spend this holiday season, whether offline or online. “If consumers are worried about paying $50 for gas, they’re not going to jump online to spend their hearts out,” Forrester said in the report, “US Online Holiday Sales Bring Good Tidings to Retailers.”

But the 2.5 million new households expected to shop online this year should offset decreased spending by consumers, producing a healthy increase in online sales, Forrester said. In addition, many shoppers will buy gifts online to take advantage of the free shipping that will be offered by about 79% of online retailers this year.

However, online retailers will likely face a weak first quarter due to offline gift card redemption and skyrocketing heating prices, Forrester said.

Last year, 37% of online shoppers indicated they redeemed a gift card offline after the holidays, compared with 13% who redeemed the cards online, according to the report. And fuel prices are expected to increase by an average $700, putting a damper on consumer spending during the first quarter.

Disappointment with on-time holiday delivery also will drive consumers away from online shopping in the first quarter, Forrester said. Only 57% of shoppers agreed that their online holiday purchases arrived on time last year, according to the report.

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