Good Tidings For Online Retailers in 2005

Retailers looking forward to a green Christmas this year will see a lot more action online, with predictions of sale increases up to 25 percent over last year, hitting a record high of $18 billion.

Forrester Research said simple addition will account for the online increase: 2.5 million new households are expected to begin shopping online in 2005.

Another factor responsible for the rise is a greater number of retailers plans to lure consumers to the Internet with promises of free shipping. Although, most outlets require minimum purchases to defer costs, according to the report.

“This is shaping up as a good — not great — holiday season,” Carrie A. Johnson, vice president and research director at Forrester Research, said in the report. “The mainstreaming of the Web means that if offline retail sales suffer, online sales do as well. The average online consumer is no longer insulated from broader economic concerns, such as volatile energy prices.”

Last year, 25 percent of online holiday shoppers indicated that they purchased more online to avoid shipping charges, according to Forester.

The annual report says brick-and-mortar retailers, nervous about soft consumer spending, will use their Web sites to drive in-store traffic.

The study used outlet store Circuit City’s 24/24 promotion as a typical example of brick-and-mortar retailer pushing online sales. The program guarantees in-store pickup of an online order within 24 minutes, with the promise of a $24 gift card if the order is not met.

Consumer electronics and toys will lead the way in online sales, but apparel will also see significant growth, as more women shop online and retailers offer increasingly sophisticated tools to illustrate style and fit, according to the report.

Forrester defines the holiday shopping season as the period between Thanksgiving and Christmas.

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