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BizReport : Ecommerce archives : October 29, 2008

Holiday retail sales outlook gloomy

Recent reports suggest that this holiday season will be tough for consumers and retailers alike, with retail sales growth down on this time last year. Even online retail isn't escaping the financial turmoil that is keeping consumer's hands firmly in their pockets.

by Helen Leggatt

Over the last decade, holiday sales have increased an average of 4.4% each year, but this year could be 'the most difficult holiday season in memory', according to a recent Standard & Poor report. The most likely scenario will be a fall of 2%, says S&P, or at best retail sales will remain flat.

Hitwise has released an equally dismal report, particularly for online retailers. Of the 500 retailers tracked by Hitwise, growth has stalled with September 2008 year-on-year figures at zero compared with 10% - 15% earlier in the year.

Since September, traffic to the online retailers being tracked by Hitwise has been down each week for the last eight weeks, likely due to the rise in financial concerns. Music retailers saw the biggest decline (21%), followed by computers (18%), ticketing (12%), toys (10%), videos (10%) and games (10%). Retailers in the health and beauty, grocery/alcohol and house and garden categories experienced increases.

Writing on the Hitwise blog, Heather Dougherty warns, "These declines have strong implications for the upcoming online holiday season as well as offline sales. Everyone is aware of the role that the Internet plays to influence offline sales through research, so this slowdown may indicate a further ripple effect in sales in retail locations."

Online retailers need to pull out all the stops and highlight the benefits of online shopping such as convenience, lack of parking, gas and time saved while at the same time reassuring and retaining consumers with fantastic customer service, added value items such as gift wrapping and tags and clear shipping/returns policies.

Tags: HitWise, holiday sales, holiday shopping, retail sales, Standard & Poor

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