Friday, January 8, 2010

Online Consumers and E-Commerce: Holiday Season 2009 and Implications for 2010


The revolutionary power of e-commerce continued to benefit the environment in 2009. Due in part to pre-Christmas storms that raged along the US East Coast, increasing numbers of consumers bought online this past holiday season. According to a MasterCard report, online sales grew more than 4 times faster than in-store buying. This is an important trend because e-commerce reduces the number of cars driving to physical outlets and online marketing connects businesses to consumers without paper or ink.

The National Retail Federation had predicted a 1 percent decline in US spending for the season. Despite these dire predictions, retail sales numbers for the 2009 Holiday Season are all positive. Chain store sales for December 2009 were up 2.8 percent compared to last year, according to numbers released by the International Council of Shopping Center's sales index. Canadian retailers also saw a modest rise in holiday sales this season.

Further analysis of retail numbers for the 2009 holiday season suggest that American buying behaviors are changing. Not only are US retail sales up over last year, online sales grew at an even faster rate than in-store buying. According to Time, MasterCard has estimated that 2009 US holiday retail sales were up an estimated 3.6 percent compared with 2008. What is most interesting is that they also report that online shopping is up over 15 percent compared to 2008.

A spokesperson for the national retail chain, Tanger Center inc., suggested that shoppers made "practical" buying decisions this holiday season. Tanger Centers are located in 33 shopping centers in 22 states coast-to-coast, totaling approximately 10.2 million square feet.

According to a CNN Money report, Tanger gift card sales rose during the November and December Holiday Season by 10.5 percent, but Tanger's on-line sales of gift cards grew by 12 percent over the previous year.

Overall holiday consumer spending was up by nearly 5 percent for the entire Tanger Outlet Center portfolio. Tanger witnessed more people purchasing more gifts but with less cars than last year, (although some Tanger shoppers travelled over 40 miles).

A January 6, 2010 AdAge.com article reports that online retailers in the US are "back in the game," with holiday sales coming in just short of 2007 levels. Although less optimistic than the MasterCard numbers, ComScore has reported that e-commerce sales for the November and December period rose 4% to $29.1 billion, compared with $28 billion a year ago and $29.2 billion in 2007.

"It's possible that this better-than-expected end-of-year performance is a harbinger of renewed vigor and optimism for 2010 as the consumer economy seeks to rebound from one of the worst years in memory," said Gian Fulgoni, ComScore chairman.

According to Kamalesh Rao, director of economic research for SpendingPulse, “People were more comfortable doing last-minute shopping online, especially with the bad weather.”

The surge in online buying this Holiday Season may have been helped by winter storms, but this should not obscure the fact that consumers are awakening to the ease and eco-benefits of buying online.

Retailers are optimistic that this trend will continue in 2010. As reported in AdAge.com, based on a survey of 50 online retailers, Credit Suisse estimates that e-commerce will grow 10 times as fast in 2010 as it did in 2009.
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2 comments:

Louise said...

Excellent article, thanks for sharing

my said...

I think you can take Ryanair as a good case-in-point, whereby some people still want great customer service after paying peanuts. For people who are more realistic, it’s worth paying that little bit more for a better experience. After all, our time and how we feel, are the most important things for many people.

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