The holiday season is around the corner. Like most people, I can't believe it's here again -- but maybe that's because I didn't take down last year's decorations and lights until June. Another part of me can't wait, especially because for the first time I'll be celebrating with my child, so that I can shower him with presents he doesn't really need and dress him up in absurd outfits -- like the unwitting Ralphie in "A Christmas Story," who had to sport the pink bunny outfit from his aunt. I also take perverse pleasure in joining in on the seasonal toy hysteria for some kind of showboating Elmo. But alas, there is no Tickle-Me, Chicken-Dance, Hokey-Pokey, or Mambo Elmo this year, and Elmo's two-step shortcomings represent the main problem with retailing this holiday season.

No hot toy threatens to incite mall riots this year. No overpriced pashmina scarf waits to drape itself over the shoulders of our mothers, sisters, aunts, and friends. And even if such a "perfect" gift was out there this year, consumers just may not scoop it up anyway. Rising gas prices, economic fears, and jobless concerns have consumers nervous, as evidenced by the recent dip in The Conference Board's Consumer Confidence Index. Still, the NRF forecasts that overall holiday retail sales will rise by 4.5%.

What about the Web, you ask? Unlike years past, online retail can't claim unfettered growth while offline sales sputter along. I almost dropped my cans of tuna at the grocery store when an older woman in the checkout line told her puzzled friend that she bought her new Puma sneakers at "an Internet store called Zappos.com." This Puma-sporting lady represents the end of an era for online retailers and the beginning of a new one -- one where mainstream shoppers are now online, and online sales mimic offline sales trends. This mainstreaming of online retail is why we're predicting a good, not great online holiday season: US online holiday sales will increase by 20% over last year -- to $13.2 billion from $11 billion in 2003.

There is a lot of good news within this 20% growth. According to the Shop.org/BizRate eHoliday Mood Index, more than a quarter of online shoppers had started their holiday shopping by the end of September. I think these must be the same people who alphabetize their canned goods. I mean, have you started shopping yet?

In addition, 32% of consumers in the Shop.org/BizRate survey expect to do more of their holiday shopping online this year, optimism that will keep online sales going strong all season. There is the danger though of a repeat of the 2002 holiday season. Remember what happened? Offline retailers were so worried that store sales would fall short that they offered almost unbelievable deals in stores -- and they did it early. Consumers flocked to stores, leaving online retailers with a lump of coal. The same dynamic could happen this year, too. Also, the Web is frequently a channel for those hard-to-find items, which it undoubtedly will be again this year, but with no cha-cha-cha-ing Elmo to hunt down, this could be a smaller factor than in the past.

Enough about Elmo. The bottom line is that online sales will have another good year. Best wishes to you for a bang-up holiday season -- in all channels. There's nothing I love more than receiving holiday success stories from the online retailer nation in January. Thanks for your time. As always, please email me at carriejohnson@forrester.com with your thoughts or suggestions for future research.


With kind regards,


Carrie Johnson
Senior Analyst, Retail Research

Research Referenced In This Issue 2002 US eCommerce: The Year In Review (16086) Amazon Edges Out eBay In Shopping Experience Satisfaction (35541) How RFID Adopters Buy Technology (35438) Internet Viruses Slow Consumers' Online Activity (34435) Multichannel Retailing Best Practices (34575) Online Holiday Sales 2004: Proceed With Caution (35550) Q3 2004 Online Sales: Up — But Barely (35563) The Interaction Platform (35368) The New Face Of Canadian eCommerce (35524) The US Consumer 2004: Online Retail (34695) Trends 2005: Online Retail (35715) US eCommerce Overview: 2004 To 2010 (34576) Web Buyers Prefer To Shop Offline (35603)

EMAIL: Email this issue to a colleague.

PRINT: View a printer-friendly version of this issue.

VIEW ARCHIVE: View past issues of First Look.

TECHNICAL SUPPORT: Call the Client Resource Center
1 866/FORRESTER (1 866/367-7378) or +1 617/613-5730.

EMAIL SUBSCRIPTIONS: If you'd like to subscribe or unsubscribe to First Look, please go to your Email Subscriptions page.