Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
Online holiday spending grew at a brisk 22% pace last week, comScore reports, while store sales were down 0.4% year over year, says ShopperTrak RCT Corp. A Consumer Reports survey finds 29% of consumers still plan to buy online before the holidays.
Online sales picked up last week, increasing by 22% over last year, according to comScore Inc. Store sales were disappointing, and analysts blamed bad weather, high gasoline prices and procrastinating consumers. A Consumer Reports survey suggests many consumers are indeed behind on their shopping-35% hadn’t even begun in early December-and 29% still expected to make an online purchase this holiday season.
Web sales totaled $4.70 billion for the week ended Dec. 16, up 22% from $3.85 billion for the comparable week last year, according to web measurement firm comScore. For the holiday season of Nov. 1 to Dec. 16 comScore says sales total $23.48 billion, up 19% from $19.79 billion for the same period last year. The fastest-growing categories this season are: video games, consoles and accessories, up 129% over last year; furniture, appliances and equipment, up 63%; event tickets, up 29%, consumer electronics, ahead 24%; and apparel and accessories, up 17%.
ComScore is predicting a 20% growth in online holiday sales this season, and chairman Gian Fulgoni says the final week will decide whether that forecast proves accurate. “We’ll know whether consumers were simply delaying their purchases in the hopes of capturing late season deals, or if the economic pressures weighing on people’s wallets were actually too strong to overcome, causing sales to fall below analysts’ forecasts,” he says.
Those who follow sales in bricks-and-mortar stores are also hoping for a strong final week before Christmas to make up for disappointing sales last week that they blamed in part on snowstorms in the Midwest and Northeast. Retail store sales for the week ended Dec. 15 were down 0.4% from the same week last year and store traffic declined by 8.9%, according to ShopperTrak RCT Corp., which samples data from more than 50,000 retail locations.
ShopperTrak co-founder Bill Martin drew comfort from week-over-week growth of 15.2% in sales and 14.1% in traffic. “We expect procrastinating consumers will make the upcoming Super Saturday weekend a significant event for retailers, putting us right on pace to hit our preseason holiday prediction of a 3.6% retail sales increase over last year,” Martin says.
Consumers may in fact be waiting to the last minute to shop, as 35% of adults surveyed Dec. 6-9 had not even begun their holiday gift buying, according to a telephone survey by the Consumer Reports National Research Center. 29% of those surveyed still planned to shop online before the holidays, and 24% of those online shoppers expected to pay more for expedited delivery. About four in 10 of them expected to buy additional items at retail web sites to qualify for free shipping or discounts.
On average, consumers had completed 52.6% of their shopping, compared to 53.1% at the same time last year, according to a BIGresearch survey conducted Dec. 4-11 for the National Retail Federation. 25 million consumers, or 11.7% had bought all their gifts, but more than 35 million, or 16.5%, said they hadn’t even started. 34.9% of those surveyed said they planned to shop online. “The last-minute rush will be busier than ever this year,” observed Tracy Mullin, president and CEO of the retailer organization.
At least two online retailers have extended shipping offers, hoping to entice those last-minute shoppers. Amazon.com extended its offer of free overnight shipping and a $5 rebate to Sunday, Dec. 23, for its Endless.com shoe and handbag site, and online electronics retailer Etronics Inc. said it would guarantee same-day delivery in the New York metropolitan area through Christmas Eve. Amazon is No. 1 in the Internet Retailer Top 500 Guide and Etronics No. 72.
In other holiday-related news:
- Tuesday was a record day for the Pulse Index that tracks transactions for 10 major online retailers, with a total of $168.9 million in sales and 3 million transactions, according to payment processor Chase Paymentech, which compiles the index from client data. That tops the previous record of $155.4 million and 2.8 million transactions set the previous Tuesday. The 10 online merchants racked up $598.1 million in sales from Tuesday through Friday of last week, making it the strongest stretch so far during the holiday season.
- Shopper satisfaction with retail web sites slipped 0.7% from the prior week to 77 on a 100-point scale for the week ending Dec. 16, but remained 2% ahead of last year. Likelihood to buy from a retailer’s offline channels was at 84.8, 4.1% ahead of last year, and likelihood to buy online stood at 75.2, 3.3% higher than last year.
- OrderMotion, which hosts order management systems for online retailers, says its transaction volume was up between 20% and 51% each day between Dec. 12-16 compared to a year ago. Dec. 10 was the biggest day in the company’s history, with volume up 10% over the comparable Monday in December 2006.
- Traffic to online retail sites in France was up 45% in the first week of December compared with a base period of Sept. 3-Oct. 28, 38% in the UK and 8% in Germany, comScore reports. A reported lack of consumer confidence in Germany accounts for the slow start in online shopping in that country, but the last two weeks before Christmas are likely to be strong, says Bob Ivins, executive vice president of European markets at comScore.
- Delivery service UPS predicts today will be its busiest day, as it expects to deliver 22 million packages worldwide. Friday will be the busiest day for air express deliveries, with 5.6 million deliveries projected. UPS projected shipping 21 million packages on its peak day last year and 5.6 million air packages, but does not disclose how many packages it actually delivered on those peak days in 2006, a spokeswoman says.