Holiday Internet Sales Fall Short of Forecasts

There was some hope that the season’s disappointing retail sales might be somewhat offset by better Internet sales, particularly since nasty weather curtailed visits to stores.

Alas, while the results aren’t in, the pattern so far is that Internet activity has similarly been more sluggish than hoped. From Bloomberg:

U.S. Internet sales rose at the slowest pace on record as discounts cut revenue in the final days of the holiday shopping season.

Online spending from Nov. 1 through Dec. 21 increased 19 percent from the same period a year earlier to $26.3 billion, Reston, Virginia-based ComScore Inc. said yesterday in a statement. Sales trailed last year’s 26 percent growth and the research firm’s forecast for a 20 percent gain during this year’s holidays.

Consumers have limited spending growth this year as gasoline and food prices rise and mortgage defaults increase. The Reuters/University of Michigan final index of consumer sentiment for December dropped to 75.5, the lowest since October 2005.

“This year will be the year of the discount,” Fred Crawford, managing director at AlixPartners LLP, told Bloomberg Television on Dec. 21. AlixPartners is a consulting firm based in Southfield, Michigan.

ComScore hasn’t recorded growth of less than 20 percent since it began reporting online sales figures in 2002.

Wal-Mart Stores Inc., Best Buy Co. and Circuit City Inc. offered discounts of 50 percent or more and promoted savings for in-store pickup of products purchased online to attract shoppers during what may be the worst holiday shopping season in five years. The peak period for Internet purchases has passed, ComScore Chairman Gian Fulgoni said in the statement.

“However, with some online retailers offering deliveries before Christmas for orders placed by Dec. 22, and in-store pickup available for orders placed on Christmas Eve, we expect to see above-average growth rates,” Fulgoni said.

Sales rose 25 percent in the five days through Dec. 21 from the same period a year earlier, ComScore said….

Shoppers are grappling with $3-a-gallon gasoline and consumer prices that rose the most in more than two years in November. The National Retail Federation in Washington said sales may increase 4 percent this November and December, the smallest gain in five years….

Spending through Web sites, which makes up more than 3 percent of all retail sales, may climb to $29.5 billion in November and December, ComScore estimated. That’s a slower pace than the 26 percent growth in online sales during the holidays in 2006.