Good News, Bad News for Holiday Retailers

Brian.oco 0 Tallied Votes 164 Views Share

Like the title suggests, it's a good news/bad news scenario for holiday retailers this year.

The good news? More people than ever are buying their holiday gifts online, thus opening up an even wider revenue pipeline from web sales for retailers.

The bad news? The holiday shopping season is shaping up to be as resilient as Lindsey Lohan passing a keg party on her way home from rehab.

First, more on the good news. According to a recent survey by Burst Media, the percent of consumers who expect to complete either a portion or all of their holiday gift purchasing online this year has surged to more than half (50.7%), up from 37.6% in 2006. 13% -- that's a pretty amazing number in only one year.

The bad news indicates that holiday spending is likely to decline from 2006 levels for many consumers. Among survey respondents from the Burst study, one-quarter (25.6%) expect to reduce spending, 36.1% will spend the same amount as the prior year and only 16.8% expect spending to increase. These conservative spending estimates are true even among the highest income segments.

The Burst study also shone a spotlight on some preferred online shopping habits displayed by Americans. Among those . . .

-- Window shopping is a critical part of Internet shopping: Survey findings show over two-thirds (68.6%) of consumers shop online and use the Internet as a resource to research products.

-- Online shopping, however, does not always result in online purchasing. Online shopping is split between Internet “window shoppers” and active online purchasers; with one-half (49.4%) of online shoppers researching and making purchases online, while 50.6% “window-shop” only.

-- Popular online “window shopping” activities are: researching and comparing features of different brands (54.5%), comparing different retailers to find the best price (52.3%), and finding the closest store location to make a purchase (33.3%).

-- Men are more likely than women to say they use the Internet to research and compare features of different brands (56.9% vs. 52.1%).

-- Security concerns are the biggest impediment to online shopping, but logistical concerns also factor into the decision: Seven out of ten online shoppers (70.7%) cite credit card security as their greatest concern when shopping online. The privacy of personal information is also a concern of online shoppers (60.8%), and is a greater concern among women than men (63.2% vs. 58.0%).

Other concerns preventing people from purchasing more online are: shipping costs (64.6%), product quality issues (52.4%), sites’ return policies (45.9%), shipping issues and/or delays (45.8%) and product availability (34.8%).

Still, I keep going back to that jump from 37% to 50% in the number of online shoppers from 2006 to 2007. At roughly 220 million American adults, that represents a lot of pocket change for online retailers.

Let's hope, for their sake, that they all show up with their credit cards online this holiday season.