Online holiday sales see double-digit gains, U.S. store traffic falls

U.S. consumers continue to shift their purchases to online venues with comScore reporting that online sales were up more than 10% through Dec. 22. And while the online volume caught retailers and shippers off guard, the level is below what some expected.

Reston, Va.-based comScore, one of the top global companies in digital measurement and Internet analytics, reported Thursday (Dec. 26) that online sales for the period between Thanksgiving and Dec. 22 totaled $42.75 billion, up 9.86% compared to the $38.912 billion during the same period in 2012.

IBM Digital Analytics estimated that online sales were up 37% during the full final shopping weekend before Christmas. Forrester Research had estimated that online sales for the 2013 holiday season would be up 15%. According to the U.S. Department of Commerce, online sales are about 6% of overall U.S. retail sales, with the National Retail Federation estimating that online sales are about 14% of holiday sales.

DOUBLE-DIGIT GAINS
comScore Chairman Gian Fulgoni said he was surprised by softer-than-expected sales in the final holiday shopping week.

“Our expectations for the online holiday shopping season anticipated that consumers would spend heavily later into the season out of necessity to make up for the highly compressed holiday shopping calendar this year,” Fulgoni said in a statement. “Unfortunately that was not in the cards, as the final online shopping week saw considerably softer sales than anticipated, including zero billion dollar spending days – although Monday and Tuesday came close.”

Despite missing expectations, comScore’s comparison showed double-digit gains on the four notable shopping days of the season.
• Thanksgiving Day (Nov. 28): $766 million in online sales, up 21% compared to 2012
• Black Friday (Nov. 29): $1.199 billion, up 15% compared to Black Friday 2012
• Cyber Monday (Dec. 2): $1.735 billion, up 18% compared to Cyber Monday 2012
• Green Monday (Dec. 9): $1.401 billion, up 10% compared to Green Monday 2012.

Wal-Mart Stores, the largest global retailer, said its Cyber Monday online sales were the most in company history. The company said it processed more than 1 billion pageviews between Thanksgiving and Cyber Monday (Dec. 2).

Business for Amazon – the biggest competitor for Wal-Mart Stores and other traditional retailers – said more than 36.8 million items were ordered on Cyber Monday, or more than 426 items per second. Amazon officials said it was a record for the company.

Interest in the company’s Amazon Prime membership – a program that offers unlimited and free two-day shipping for an annual fee of around $79 – was so robust that at times Amazon limited access to the program so as to not negatively impact service to existing Prime members.

SHORTER SALES PERIOD
The 2013 holiday season, according to comScore, had 10 days with more than $1 billion spending, which was down from last year's total of 12 individual days. The comScore statement noted that there were six fewer days of online shopping in 2013 compared to 2012.

“In the end, I think we'll look back at this online holiday season as one where absolute dollar sales gains in consumer spending were held back by heavy retailer price discounting that occurred in an attempt to stimulate consumer demand, while at the same time, consumers weren't willing or able to increase their spending rate to fully compensate for the six-day shorter shopping period between Thanksgiving and Christmas,” Fulgoni said in the statement.

Sales between Nov. 1 and Dec. 24 were up 2.3%, according to a MasterCard Advisors' SpendingPulse report. The report, released Thursday (Dec. 26), noted that sales during a similar period in 2012 were up just 0.7%.

Sarah Quinlan, senior vice president at MasterCard Advisors, said in this Reuters report that jewelry was the best-performing category. SpendingPulse tracks customer spending on apparel, electronics, jewelry, luxury and home furniture & furnishings categories during the holiday season.

The comScore statement listed the top five retail categories for online purchases. The top category was video game consoles and accessories, followed by apparel and accessories; consumer electronics; computer hardware; and home and garden.

SHIPMENT DELAYS, GIFT CARD SALES
While the sales were below comScore’s expectations, the volume of goods purchased online proved more than many retailers and shippers expected.

UPS, which reportedly delivers about 45% of all U.S. packages, said its Monday air network volume exceeded the 7.75 million units the company expected. The company noted in a statement: "The volume of air packages in the UPS system did exceed capacity as demand was much greater than our forecast.”

Wal-Mart Stores, Amazon, Target and many retailers were unable to meet all shipment promises as a result of the surge of last-minute online purchases. Amazon offered a $20 gift card and refunded shipping costs for customers who did not get packages before Chirstmas. Kohls said it would pay the full cost of products not shipped in time.

In addition to an increase in online sales, consumers also are continuing the trend of buying gift cards.

The Corporate Executive Board predicted that gift card sales will top $118 billion in 2013, up 8% compared to 2012. Sales of so called “open network branded” cards like American Express or MasterCard were expected to grow from $41 billion in 2012 to $44 billion in 2013.

“The e-gifting trend will help propel continued growth in the gift card market in excess of $140 billion in sales by 2016,” noted the CEB report. “E-gifting is expected to top $10 billion during the same period, filling a niche for customers seeking to simultaneously buy and send their gifts to recipients they may not see in person over the holidays.”

BRICK-AND-MORTAR DECLINE
With online sales growing, it’s no surprise that brick-and-mortar sales and traffic struggled during the holiday season.

ShopperTrak, one of the world's largest counter and analyzer of retail shopper traffic, reported that for the Dec. 16 – Dec. 22 period that in-store retail sales fell by 3.1% from the same period in 2012. Retail brick-and-mortar shopper traffic plummeted by 21.2% compared to the same period in 2012.

“Bad weather throughout the country kept some shoppers away from stores," Bill Martin, ShopperTrak founder, said in a statement "This past week was their final opportunity to complete their holiday shopping before Christmas – and though many did finish making their purchases, retailers did not see as many shoppers as last year."

ShopperTrak said retail sales fell 0.7% and traffic was down 18.1% on the final Saturday before Christmas.

“ShopperTrak predicts after-holiday markdowns to drive robust retail sales and store traffic in the days to come, particularly the day after Christmas (Dec. 26) and the following Saturday (Dec. 28),” noted the statement.