Online Sales Now An Essential Element of Holiday Projections

Online retailers got an early Christmas present from the National Retail Federation, which for the first time in its history released a holiday forecast for online sales. The NRF predicted holiday sales online will grow 12 percent over last year to as much as $96 billion. News outlets picking up that story delved into the reasons for the increase, making it clear that when it comes to forecasts for the vital holiday shopping season, online retailing now merits a discussion all its own.

The NRF’s prediction for holiday sales overall was its most optimistic since the recession, an increase of 4.1 percent to $586.1 billion. Over the last decade, sales have grown an average of 3.5 percent annually. In making its announcement the NRF used words like “moderate” and “pragmatic.” But the group was more enthusiastic about online sales, and offered this assessment from NRF President and CEO Matthew Shay:

Online retail has been a bright spot for years and we don’t expect that trend to change anytime soon, especially with the growth in mobile. Aside from the convenience, shoppers look to the holiday season to take advantage of retailers’ increased digital offerings. In addition to enhancing the site experience, retailers have spent the year investing in optimizing their mobile and social platforms, just what holiday shoppers are looking for.

‘A bright spot when retail struggles’

The executive director of NRF’s online arm, Shop.org, subsequently gave an interview in which she discussed the growing importance of online holiday sales and why the NRF is breaking them out. In the Fox Business interview Vicki Cantrell said:

Online is important as a channel with exponential growth. It’s seen double-digit [percentage] growth for years. It’s a bright spot when retail struggles. It has to be looked at separately.

Cantrell also discussed online retailing’s potential:

There’s so much room to grow. As retailers perfect their multichannel offerings and delivery, it just continues to be a convenient and cost-efficient option for the consumers. That channel of shopping will continue to grow in the double digits [on a percentage basis].

Fox Business made the discussion mobile with projections from the consulting firm Deloitte that said “mobile-influenced demand” will represent 5.1 percent of retail store sales this holiday season, as consumers continue to use their mobile devices to obtain research and price comparisons. It quoted Alison Paul, who leads Deloitte’s retail & distribution practice:

Retailers that welcome the smartphone shopper in their stores with mobile applications and Wi-Fi access — rather than fear the showrooming effect — can be better positioned to accelerate their in-store sales this holiday season. The mobile channel is a powerful customer-engagement tool, enabling retailers to capture a shopper’s attention at the point-of-purchase, while gleaning valuable information about shopper behavior regardless of the shopper’s location.

Paul cited Deloitte’s research showing that shoppers with smartphones are 14 percent more likely to make a purchase in the store than those who don’t use a smartphone in their buying process.

‘Don’t Thank Social or Mobile’

The real proof that online holiday shopping now merits its own discussion is presence of detractors.  All Things D sniffed, “E-Commerce Will Grow Again This Holiday, But Don’t Thank Mobile or Social.” That story quoted a Citi Research report saying that 20 percent growth will come because of two additional shopping days. It said:

While mobile and social will likely grab headlines this season, retailers should concentrate on their ‘core technologies,’ namely e-commerce nuts and bolts, and strategies that integrate their traditional stores [with online ordering and in-store pick-up].

The Citi report said smartphones’ share of e-commerce will more than double over the next four years to 7 percent. That should make plenty of holidays happier, and no doubt keep us talking about an increasingly important element of holiday shopping.


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