Online retail sales in the US will reach nearly $52 billion this holiday season, a 16 percent increase over last year’s weak numbers, according to a new forecast by Forrester Research, Inc. (Nasdaq: FORR). The 2010 growth rate is twice the rate in 2009, when online holiday sales grew 8 percent in the wake of the global recession. Forrester defines the holiday shopping season as the months of November and December.
“Consumers are showing a willingness to spend this season,” said Sucharita Mulpuru, Forrester Research vice president and principal analyst. “And, almost universally, online retailers expect their holiday sales to increase this year over last year, showing industrywide optimism.”
The National Retail Federation is forecasting a 2.3 percent increase in total holiday retail sales this year, reflecting the overall strength of the online channel.* A recent Forrester survey of 4,700 US online consumers showed that they will make 37 percent of their purchases via an online channel this holiday season, compared with 30 percent in 2009. And 80 percent of retailers surveyed in the Shop.org/Forrester Q3 2010 Online Sales Flash Survey say that their gross online sales increased year over year for Q3, a likely indicator that the trend is primed to continue.
As outlined in the new Forrester report, “US Online Holiday Retail Forecast, 2010,” 87 percent of US online buyers with a household income of $100,000 or more say they will spend the same or more online this year compared with last year, while just 13 percent say they plan to spend less. This year will also see a boost in mobile’s role in completing a purchase — 18 percent of US online adults plan to use their mobile device to compare retail prices, and 16 percent expect to use their phone to locate a nearby store.
“Online retailers are primed to react to this year’s holiday trends,” said Mulpuru, “initiating aggressive promotional programs to drive holiday sales – exceeding even the discounts of previous years.” Expect to see larger promotional budgets to drive interaction, in addition to the usual incentives such as “buy one, get one free.” Deep discounts will also be in play, but key dates such as Black Friday and Cyber Monday will be of utmost importance. “Retailers must expect heavy price-based competition this season and be prepared to play.”
*The National Retail Federation and Forrester forecasts do not cover the same categories and employ different methodologies.