Online shopping stays strong while stores lag
(USA Today) Holiday shoppers are busy online, while physical stores have some work to do to salvage what has been a challenging season so far, retail experts said Monday.
While the crucial holiday season started strongly, especially for e-commerce companies Amazon.com and eBay, there was concern about a possible lull in the middle of the period between Thanksgiving and Christmas. However, that slowdown, which hit hard last year, has yet to materialize.
"So far we haven't seen much of a dip -- not nearly as much as last year," said Scot Wingo, CEO of ChannelAdvisor, which helps merchants sell more online.
This holiday season is six days shorter than last year, leaving consumers less time to complete gift purchases. Promotions continue to come thick and fast, which also may have helped prop up sales, he added.
Wal-Mart, the world's largest retailer, launched a new series of online sales this Monday, calling the event "Gold Monday."
Amazon unveiled an interest-free installment plan that lets shoppers buy one of its Kindle Fire HDX tablets over nine months. In the U.K., the company offered 10 pounds off select products if consumers spend 50 pounds by Dec. 24.
"I haven't seen them do something that aggressive in a while," Wingo said.
ChannelAdvisor clients are generating same-store sales growth of more than 30% on Amazon.com so far this holiday, compared to the same period last year. On eBay, that number has been in the mid-20% range. Wingo said those results were positive for both companies.
"Online is going to be the darling of the holiday shopping season," said Marshal Cohen, chief retail industry analyst at The NPD Group. "It may grow a little more than the 20% that was expected before the season began. The consumer is spending more time online trying to find deals."
In contrast, physical store retailers have had a tougher holiday season so far. With Christmas nine days away, consumers have completed 44% of their shopping, a little behind where they should be at this point, according to Cohen.
"Some say it's the weather and I say it's a lack of exciting merchandise," he added. "Stores have not done enough to generate excitement and consumers are waiting for sales and discounts to get better."
Brian Sozzi, CEO of Belus Capital Advisors, a research firm focused on the retail sector, visited five Wal-Mart stores in the New York City area recently and found excess seasonal inventory.
"They just bought too much," Sozzi said. A Wal-Mart spokeswoman did not immediately respond to a request for comment Monday.
Sozzi also spotted lots of clearance racks with items priced 40% to 70% off at J.C. Penney stores and aggressive promotions by Abercrombie & Fitch, Gap and Coach.
A large storm this weekend in the Northeast and Midwest prevented some shoppers from visiting stores on Saturday. But there is still another weekend to go before Christmas and purchases have probably been delayed rather than canceled, analysts said Monday.
Super Saturday is the Saturday before Christmas, when many shoppers try to get in their last minute shopping. This year, that day falls on Dec. 21.
"About 50% of shopping will be done in the last week of the holiday season," Cohen said. "Retailers will be able to make it up this weekend. But if the weather plays havoc again it could take a toll."
Belus Capital's Sozzi suggests shoppers buy gift cards and wait until the days following Christmas when retailers will likely have even bigger discounts. The analyst highlighted Best Buy in particular, which has been among the most aggressive with promotions to compete with Amazon.
For shoppers planning to buy gifts late in the season online, orders can be placed on Dec. 23 for fast delivery the following day, UPS said.
Amazon is offering one-day shipping on orders placed as late at Midnight EST on Dec. 23. For Dec. 24, the company offers Local Express Delivery in cities including Boston, Chicago and New York for $3.99 per item.
EBay is keeping its same-day delivery service, eBay Now, open longer from Dec. 16 to 23 to capture sales from consumers doing last minute shopping.