In Store or Online? Depends Who You Ask

This much we know: it’s been an emotional and unsettling autumn, and that has not been good for economy. But how that will influence holiday spending, and whether it’s spent online or offline, we have yet to find out.

Only 11 percent of shoppers said the Internet will be their first choice for holiday shopping, an Accenture study found. The most likely to benefit from such sentiment are traditional offline retailers with a strong online presence. Such retailers had a strong holiday online last year, and even get some ROI from shoppers who look online but buy offline.

Eighty-three percent of respondents said shopping in a physical store was their first choice for shopping venue. Less than half (43 percent) of respondents reported that they do not plan to shop more on the Internet than they did last year. Of those, 67 percent stated it is because they prefer physical stores. Almost one-quarter (23 percent) of respondents said that they do expect to shop more on the Internet than they did last year. Of those, 63 percent cited the convenience of online shopping; 15 percent said they find more sales and promotions online; and 11 percent enjoyed the ability to make purchases online and have items shipped directly to friends and family. Thirty-three percent of respondents planned to shop online the same amount as last year.

The Accenture study, which was conducted online from Oct. 22, 2001, to Oct. 30, 2001 by 1,436 U.S. consumers who planned to shop during the coming holiday season, also examined the enigmatic area of holiday spending in the wake of a down economy and the Sept. 11 attack. The largest percentage of respondents — 44 percent — said their holiday spending would be the same as last year, predicting a total budget of between $200 and $499. Almost one-half (45 percent) said that sale items would be “very influential” in their purchasing decisions. In fact, 43 percent said that, due to the economic downturn, they would look for more sales and promotions.

“Clearly, this holiday season will be highly promotional,” said Angela Selden, managing partner, Accenture North American Retail industry group. “Retailers who can attract customers with compelling promotions and convert that traffic into sales with appealing merchandise and in-store offers are poised to win.”

Among all shoppers, clothing proved to be the most sought after gift item. More than three-quarters (76 percent) said they plan to purchase clothing from a physical store, 45 percent plan to purchase clothing from a catalog and 21 percent intend to do so through the Internet.

“Overall, consumers will continue to spend money during the holiday season, but there is likely to be a significant shift in where those dollars are spent,” Selden said. “The savvy retailers will capture those dollars by using information and analytics to quickly respond with pricing, presentation and advertising changes that capitalize on what early trends are telling them.”

Uncertain is probably the most accurate way to describe the 2001 holiday season as it kicks off. And while Accenture sees offline stores continuing to handle most of the load, GartnerG2 expects in-store purchases to drop by as much as 10 percent as consumers flock to the relative safety of shopping online.

GartnerG2 projects worldwide online holiday shopping to surpass $25 billion this year, a 39 percent increase from the same period last year.

“Recent events have forced consumers to rethink their shopping habits and travel plans more than ever before,” said Geri Spieler, research director for GartnerG2. “Many people will shop online from home if they choose not to travel during the holiday season. The plans retailers make now to deal with these changing shopping habits will help them better manage the demands of forecasting, spending and fulfillment.”

Fewer travelers could mean more money for general merchandise and apparel. GartnerG2 predicts that economic activity for retail will begin to recover in the second quarter of 2002, and that quarterly retail growth rates for the United States will range from between 1.5 percent in the first quarter to 4 percent in the fourth quarter of 2002. Additionally, the real gross domestic product (GDP) in 2002 is forecast to grow 1.6 percent for the year.

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