The acquisition will add more than 300 products to L’Oreal’s lineup.
Two projections differ on how merry retailers will be at season’s end.
A stock analyst who follows e-commerce predicts e-retail sales will grow 10-15% this holiday season, but an economist makes a more conservative 6% growth estimate based on an analysis of U.S. Commerce Department data. Meanwhile, a separate survey of e-commerce companies shows nearly two-thirds expect this holiday season to be better than last year.
Colin Sebastian of Lazard Capital Markets made the prediction of 10-15% holiday growth in a call with clients and journalists. He noted that a Lazard consumer survey fielded earlier this month showed 18% of consumers plan to increase their online spending this holiday season, while 9% plan to spend less online, with the rest holding web spending steady.
“The data indicated positive trends that underscore the secular trend favoring online shopping,” Sebastian says.
Frank Badillo, vice president and senior economist at research and consulting firm Kantar Retail, projects consumer spending across all channels during the fourth quarter will be up 2.5%, but that it is unlikely that online e-retailers will match the 15% growth rate the channel saw during the last holiday season. He estimates online sales will post 6% growth.
“During the last holiday season [e-retail] growth was driven by first-mover demand for consumer electronics like e-readers. This year, growth will depend on how successful e-retailers are at grabbing more share from stores,” he says. He also notes that fourth quarter sales may appear weak to e-retailers because consumer spending was strong during the first half of 2010 but has since dropped off.
“Spending is still much better now than it was a year ago,” he says, and adds that economic indicators point to a stronger recovery on the horizon, just not in time for the holiday selling season. As a result, Badillo says Q4 will be rife with promotional activity by retailers in all channels. “Price cutting is only going to get worse going into the holiday,” he says.
A separate survey by Bold Software, a provider of live chat technology, finds that 65% of 171 e-commerce clients surveyed expect year-over-year gains in holiday sales, while 33% expect the same results and only 2% expect the 2010 online holiday season will be worse than last year’s. 60% of the e-commerce companies surveyed were retailers, with the rest providing a variety of services, including travel, web hosting, training and education.
The Lazard survey of 314 online consumers, which skewed slightly to older and more affluent individuals, also found that a big majority of consumers plan to start their holiday shopping trips on search engines (41%) or online marketplaces like Amazon, eBay and Buy.com (49%). Only 3% listed comparison shopping sites as their starting points and 7% says they navigate directly to the web sites of retailers by inputting their URLs, such as Macys.com.
Because retailers often use paid search ads to reach search engine users and pay commissions to marketplace operators, Sebastian says retailers’ acquisition costs will tend to rise as a result of this trend in consumer behavior.
The Lazard study also found:
- Amazon is the top online retail destination, with 75% of survey respondents planning to shop there this holiday season, compared to 47% for eBay.
- 59% of consumers plan to use PayPal, the online payment service owned by eBay Inc., at least once during this holiday season.
- 20% of consumers surveyed say they have already made a purchase through a mobile device, which Lazard defines as a smartphone or a tablet computer like Apple’s iPad. Sebastian says the survey asked about merchandise purchases, not just games or ringtones.
- Google remains by far the dominant search engine, preferred by 67% of respondents, compared to 19% for Yahoo, 10% for Bing and 4% other engines.
Kantar Retail also delved into consumer shopping habits with new research and reported the following:
- One in 20 consumers say they will do 100% of their shopping online this year.
- One-third of consumers will use the Internet to comparison shop this holiday season.
- Only 20% say they will not go online at all to shop this season.
- 27% of consumers who started their holiday shopping in September—Kantar Retail categorizes them as very early shoppers—bought online.