October 25, 2012, 9:52 AM

Handicapping the holidays: price matching, gas prices and elections will influence sales

Stores need strategies to counter online price competition, says the CEO of Zoovy.

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Price matching by retail chains trying to compete better with web merchants could play a notable role this holiday shopping season, says Brian Horakh, founder and CEO of e-commerce platform and services provider Zoovy Inc.  The election results and gas prices also could influence how much consumers spend online this holiday season.

Offering predictions for the how the holiday season will unfold online, Horakh said that more consumers carrying web-enabled mobile devices such as smartphones will shop inside stores but also check prices online and perhaps buy from online retailers while still in the store. “I know we're going to see a lot of showrooming, and I believe that retailers who have developed good strategies to effectively mitigate that—for instance, price matching—will reap rewards,” he says.

Some retail chains say they will match web prices for the first time this holiday season. Target Corp., No. 23 in the Internet Retailer Top 500 Guide, announced this month a price-match policy for the holidays. Target stores will match prices on qualifying items sold at Amazon.com Inc., BestBuy.com, Walmart.com and ToysRUs.com—including BabiesRUs.com—between Nov. 1 and Dec. 16. The policy also includes items sold on Target.com. Best Buy Co. also says it will let employees in some cases match online prices.

Gas prices also could influence how many consumers shop online instead of driving to stores, he says. For now, gas prices are trending down, which is good news for stores. According to the AAA auto club this week, the national average price for a gallon of regular unleaded gasoline stands at $3.67, 12 cents lower than a week ago and 15 cents lower than a month ago. AAA expects gas prices to continue to drop as Election Day, Nov. 6, approaches. “While the national average has been the highest on record each calendar day for more than two months, the gap between the price this year and the previous record continues to narrow,” says an AAA spokesman.

Other factors that promise to influence the 2012 online holiday shopping season, he says, include weather and the results of the election—specifically, if consumers fear that the country will suffer the so-called “fiscal cliff” and react accordingly. The fiscal cliff refers to legislation scheduled to take effect in early 2013 mandating large federal budget reductions and tax increases that would reduce consumers’ spending power. Congress is likely to consider action after the election to avoid changes that could slow the economic recovery.

Horakh also anticipates that holiday success will greet retailers who best serve last-minute shoppers. There will be many of them: A survey released this week by Deloitte LLC that shows 58% of consumers will do holiday shopping in December—and that 29% of those shoppers will wait until the week before Christmas in order to get the best discounts. “Retailers who have figured out how to do same-day delivery and pickup, or inexpensive next day delivery and who can educate their customer bases on that, should finish the year more jolly than the rest,” he says.

A report in early October by Shop.org, the digital division of the National Retail Federation trade group, predicted that online holiday spending will increase 12% this year to between $92 billion and $96 billion.

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