Even as some brick-and-mortar retailers have been lamenting disappointing holiday sales figures in their stores so far this season, online retail-spending rose from $4.4 billion in October to nearly $6.4 billion in November.
According to a monthly survey issued today by the National Retail Federation (NRF) and Cambridge, Mass.-based Forrester Research Inc., online sales in November 2000 exceeded the combined sales of last November and December by more than 25 per cent – or $1.4 billion, according to Scott Silverman, a vice-president of Internet retailing at the NRF.
“Even if December 2000 is equal [to] or even slightly lower than November, we can still expect online spending in 2000 to more than double last year’s performance,” Silverman said.
The NRF is a Washington-based retail trade association with more than 1.4 million member stores.
According to Barrett Ladd, an analyst at Gomez Advisors Inc. in Waltham, Mass., the numbers show that even with recent “doom and gloom” about the nation’s economic picture and a long list of pure-play Internet companies that have gone out of business in recent months, the future for online retail sales remains one of growth.
“There’s so many more sites online, and there’s so many more click-and-mortar [businesses that] have a strong online presence,” Ladd said. “There are so many more Internet users at this point who are actually transacting business online that those numbers are going up.”
The growth is showing up in online sales because it’s still developing, while brick-and-mortar stores have less opportunity to increase sales in such volumes, she said.
Paul Ritter, an analyst at The Yankee Group in Boston, said that while the numbers are pleasing, many retailers both online and off-line have had to use enticements and discounts to get shoppers to buy, which will hurt profit margins.
While the overall sales figures are good, Ritter said, “it’s the net results that really matter.”
About 10 per cent of online retailers will have great success this holiday shopping season, Ritter said, while the other 90 per cent will probably have less growth than they expect.
The NRF/Forrester findings also showed that more than 22 million households shopped online in November, spending an average of $285 per person.
The monthly NRF/Forrester Online Retail Index survey was done in conjunction with Greenfield Online Inc. in Wilton, Conn.
The survey tracks sales of toys, sporting goods, apparel, books, music, videos, flowers, linens, large and small appliances, tools and hardware, airline tickets, car rentals, hotel reservations, computer hardware, consumer electronics, footwear, garden supplies and more.
The largest online sales increases from October to November were seen in the toys, sporting goods and apparel categories. Online sales of toys and videogames increased from $203 million to $673 million, while online sales of sporting goods shot from $68 million to $152 million. Apparel sales rose from $253 million to $525 million.
Still, some online retailers in even the highest growth areas are encountering problems. Los Angeles-based eToys Inc. said last week that its quarterly results will be substantially below plan, and layoffs next month are likely
Online sales remain a small part of overall U.S. holiday purchases. Bentonville, Ark.-based Wal-Mart Stores Inc. alone said its November sales exceeded $16.4 billion. The NRF says that retail sales for the holiday season in 1999 topped $186 billion.
The NRF/Forrester Online Retail Index collects data from online shoppers to measure the growth of sales. The index is based on 5,000 responses during the first nine business days of the month from an online panel developed by Greenfield Online. The survey results for November were collected from Dec. 1 to Dec. 11.