Online Holiday Sales Forecast - eMarketer Nov 2011

8/3/2019 Online Holiday Sales Forecast - eMarketer Nov 2011

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Digital Intelligence Copyright 2011 eMarketer, Inc. All rights reserved

The eMarketer View 2

Retail Holiday Sales Outlook 3

Drivers of Online Sales 6

Conclusions 10

Related eMarketer Reports 11

Related Links 11

About eMarketer 11

November 2011

Executive Summary: US retail ecommerce holiday sales (excluding travel) will reach $46.7 billion in 2011, up

16.8% over 2010. By comparison, total retail sales will see meager growth o about 3%. Online holiday sales will be

driven by consumers who allocate a larger share o their git spending to the internet to nd savings and to take

advantage o ecommerces greater convenience.

133717

The two drivers o holiday ecommerce sales growth continue to

be more online buyers and greater spending per online buyer.

This year, higher-income consumers will lead the charge online.

Their online purchasing will rival or surpass what they spend in

other venues, like department stores, apparel stores and home

electronics stores.

Online holiday sales will also get a boost rom smartphone and

tablet users. Some plan to use their mobile devices or holiday

purchases. Others will use them in-store or product research

and price comparison, which in turn oten leads to online sales.

Key Questions

What is the outlook or online holiday sales this year

compared with recent years?

What are the mind-sets o consumers and retailers this

holiday season?

Why will ecommerce sales grow at a higher rate than total

retail sales?

billions and % changeUS Retail Ecommerce Holiday Season Sales, 2006-2011

2006

$26.4

2007

$31.6

19.4%

$29.1

-7.8%

2009

$34.0

16.9%

2010

$39.9

17.4%

2011

$46.7

16.8%

Retail ecommerce sales % change

Note: sales are for Nov and Dec of each year; excludes online travel, eventticket and digital download salesSource: eMarketer, Nov 2011

133717 www.eMarketer.com

2008

Jeffrey [email protected]

ContributorsKrista Garcia

Online Holiday

Sales Forecast:Savings and Convenience Will Drive

Strong Sales


2/11

Online Holiday Sales Forecast: Savings and Convenience Will Drive Strong Sales Copyright 2011 eMarketer, Inc. All rights reserved. 2

The eMarketer View

Key eMarketer NumbersUS Online Holiday SalesForecast

Retail ecommerce sales (billions)

Retail ecommerce sales growth (% change)

$39.9 $46.7

Holiday season*

17.4% 16.8%

Holiday season* Full year

$167.3(1)

$195.0

Full year

15.2%(1) 16.5%

2010 2011 2010 2011

2010 2011 2010 2011

Note: excludes online travel, event tickets and digital download sales;*sales are for Nov and Dec of each yearSource: eMarketer, Nov 2011; (1) US Department of Commerce, Aug 2011

133723 www.eMarketer.com133723

Online Holiday Season Sales Dened

eMarketer, like the National Retail Federation (NRF),

denes the holiday season as November and December.

Holidays in this period include Thanksgiving, Christmas,

Hanukkah and Kwanzaa. To be clear, holiday season

sales reer to all retail spendingpurchases either

related or unrelated to these holidays. So, or example,purchases o groceries and other essential goods are

included. This inclusion o both kinds o purchases is

a practical consideration because o the diculty o

separating one type o purchase rom the other.

Online holiday sales growth will come at the expense o

in-store sales. Online holiday sales are expected to grow 16.8%

compared with last years sales, while total retail sales (online

and ofine) are orecast to increase by only 3% this holiday

season. This disparity is a result o consumers moving purchase

dollars rom physical stores to the web. This trend was seen in

a pre-holiday Nielsen survey that ound while only 5% o onlineconsumers planned to spend more dollars on holiday gits in

2011 compared to a year ago, two to three times as many o

these consumers planned to increase their holiday spending on

the internet this year compared to last year.

Online holiday shopping has become mainstream.

Nearly hal o all online consumers are expected to buy gits

on the internet this holiday season. Consumers across all

income levels will seek the convenience and money-saving

opportunities o online shopping. In all likelihood, online

holiday shoppers will purchase more gits on the internet than

in clothing, home electronics or toy stores.

The internet is especially well suited or holiday git

buying. In 2010, online holiday season sales accounted or

7.4% o total retail salesa rate that will likely exceed 8%

in 2011. But when purchases unrelated to the holidays are

stripped out, the share o online holiday season sales rises

considerable. In pre-holiday surveys consumers said they

would spend around 33% o their git dollars on the internet

this year. This reveals how the internet has become an

indispensable tool or comparing prices, discovering git ideas

and nding popular items that are out o stock in local stores.

Many consumers are planning to buy online to avoid

crowded stores. Tired o the renzied ritual o in-store

holiday shoppingparticularly Black Friday door-busterdealsconsumers are choosing to do more git buying online.

Retailers are responding with online deals that meet or beat

their in-store oers. Moreover, retailers are posting their

online Black Friday deals on Thanksgiving Day. As a result,

the traditionally amily-centered holiday has turned into a

major online shopping event. Last year, ecommerce sales

on Thanksgiving Day grew by 28% over the previous year,

according to comScore.

Afuent consumers uel online holiday sales growth.

Upscale consumers are avid and sophisticated online deal-seekers

as evidenced by their use o digital coupons, social media andBlack Friday sites. Higher-income consumers are more involved

with online holiday shopping than lower-income shoppers on

several counts: They are more likely to make holiday purchases

online and spend a greater share o their total git budget with

web retailers.

Smartphones and tablets are boosting holiday

ecommerce sales. Mobile devices create opportunities

to divert what might have been an in-store purchase into

an online sale. For example, when consumers use their

smartphones to look up inormation about a product while

in a store, they oten end up buying it online rom another

retailer. And one o the main reasons consumers use tablets

or holiday shopping is to avoid crowded stores.


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Retail Holiday Sales Outlook

Consumers are expected to hold back on holiday

spending this year because o rising ood, gas and

utility prices as well as concerns about the economy.

Several pre-holiday surveys conrmed shoppers

intentions to spend either the same or less on

purchases during the 2011 holiday vs. last year.

No more than 12% o online consumers said they

expected to increase their holiday spending this year.

% of respondents

Comparative Estimates: Change in Planned HolidaySpending Among US Internet Users, 2011 vs. 2010

Accenture, Sep 2011

Deloitte, Oct 2011

Kantar Retail*, Aug 2011

BIGinsight, Sep 2011

Nielsen, Sep 2011

More

12%

10%

9%

6%

5%

Same

66%

49%

50%

32%

48%

Less

22%

42%

35%

39%

36%

Too earlyto know

-

-

-

23%

-

Do not buyholiday gifts

-

-

6%

-

10%**

Note: numbers may not add up to 100% due to rounding; *amongconsumers; **or undecidedSource: various, as noted, 2011


It is no surprise then that leading retail research and trade

organizations are predicting retail industry sales will grow at a

modest 2.5% to 3.5% rate this holiday season.

% change vs. prior year

Comparative Estimates: US Holiday Season RetailSales Growth, 2011

International Council of Shopping Centers (ICSC), Sep 2011 3.5%

ShopperTrak, Sep 2011 3.0%

Deloitte*, Sep 2011 2.5%-3.0%

Kantar Retail**, Sep 2011 2.8%

NRF, Oct 2011 2.8%

Note: sales are for Nov and Dec unless otherwise stated and excludeautomotive dealers, gas stations and restaurants; *sales are for Nov-Jan;**sales are for Oct-DecSource: various, as noted, 2011


This is a sharp drop rom last seasons 5.2% growth rate as

estimated by the National Retail Federation, based on US

Department o Commerce data. Pent-up demand and weak

2009 holiday sales contributed to the strong perormance last

holiday season. Still, the NRFs 2.8% orecast rate is slightly

higher than the organizations 10-year average holiday sales

increase o 2.6%.

% changeUS Holiday Sales Growth, 2006-2011

2006

3.1%

2007

1.8%

2008

-4.4%

-0.4%2010

5.2%

2011*

2.8%

Note: *forecastSource: National Retail Federation (NRF) derived from US Department ofCommerce data, Oct 6, 2011


2009

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Online Holiday Sales Forecast

Against this backdrop, online holiday sales (excluding travel) will rise

16.8% this yearsix times higher than total industry growthto

reach $46.7 billion. This marks three years o strong online holiday

sales and demonstrates the webs ability to help consumers

achieve their holiday git buying goals in a weak economy.

billions and % changeUS Retail Ecommerce Holiday Season Sales, 2006-2011

2006

$26.4

2007

$31.6

19.4%

$29.1

-7.8%

2009

$34.0

16.9%

2010

$39.9

17.4%

2011

$46.7

16.8%


Note: sales are for Nov and Dec of each year; excludes online travel, eventticket and digital download salesSource: eMarketer, Nov 2011


2008

133717


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Strong online holiday spending, in turn, will boost ecommerce

sales to $195 billion or the year, up 16.5% over 2010. Online

holiday sales will account or almost a quarter (23.9%)

o online sales in 2011, underlining the importance that

November and December have on many retailers annual

ecommerce sales.

billions and % change

US Retail Ecommerce Sales, 2006-2011

2006

$114.9

2007

$138.1

2008

$142.3

2009

$145.2

2010

$167.3

2011(1)

$195.0


Note: excludes online travel, event ticket and digital download salesSource: US Department of Commerce, Aug 2011; (1) eMarketer, Nov 2011


23.8%20.2%

3.0%2.1%

15.2%16.5%

133716

As a result o strong growth, ecommerces share o total

retail sales is gradually increasing, with the biggest gains

taking place during the holiday season. In 2010, ecommerce

accounted or 5.7% o sales rom January through October, but

jumped to 7.4% or the holiday season.

US Retail Ecommerce Sales as a Percent of TotalRetail Sales, 2006-2010

2006

4.1%

5.1%

2007

4.8%

6.0%

2008

5.0%

5.8%

2009

5.2%

6.7%

2010

5.7%

7.4%

Jan-Oct Holiday season (Nov-Dec)

Note: retail ecommerce excludes online travel, event ticket and digitaldownload sales; total retail excludes auto dealers, gas stations and fueldealersSource: US Department of Commerce, Aug 2011; eMarketer calculations,Nov 2011


Note: These single-digit rates apply to all online purchases that occur

in November and December. When only holiday purchases are

considered, ecommerces share is expected to be over one-third o

total retail sales or November and December.

eMarketers prediction o 16.8% online holiday sales growth

is bullish compared to the orecasts rom Deloitte and Kantar

Retail, but this is largely due to dierences in denitions.

% change vs. prior year

Comparative Estimates: US Retail Ecommerce HolidaySeason Sales Growth, 2011

eMarketer*, Nov 2011 16.8%

Deloitte**, Sep 2011 14.0%

Kantar Retail***, Sep 2011 13.5%

Note: *sales are for Nov and Dec of each year; excludes online travel, eventticket and digital download sales; **non-store sales for Nov-Jan with nearly3/4 coming from the online channel; ***sales are for Oct-DecSource: eMarketer, Nov 2011; various, as noted, Sep 2011


Kantars holiday orecast is or Q4 2011 and thereore includesOctober, which comes beore the surge in holiday sales.

Meanwhile, Deloitte denes the holiday season as November

through January. By the second hal o January much o the

residual holiday spending has tapered o. Deloitte also lumps

catalog and interactive TV sales with ecommerce in its

non-stores category. While ecommerce sales represent nearly

75% o non-store sales, according to Deloitte, catalog salesa

large part o the remaining 25%are likely to be growing at a

slower rate, thereore decreasing the total orecast.

Denitions aside, eMarketers orecast also actors in that

ecommerce has been insulated rom the lingering eects o

the recession and has even benetted rom price-conscious

consumers reliance on the internet to save money.

eMarketers orecast is supported by Shop.orgs eHoliday

survey o 51 retailers, conducted rom September 22 to

October 14, 2011. Some 68% o respondents expected their

companys online holiday sales to grow at least 15% in 2011

compared to last year. Furthermore, FedEx said in October

2011 that SmartPost, its residential shipping service designed

or online and catalog retailers, would have holiday volume

growth o more than 30% above last year.



5/11


Experts Predictions

In publishing their orecasts, retail experts addressed

the issues aecting their consumer spending outlooks

leading into the holiday shopping season as well as some

o the strategies retailers need to deploy to cope with the

challenging environment.

National Retail Federation

The principal US retail trade associations 2011 orecast o

2.8% growthon volume o $465.6 billionis well below the

5.2% rise last year. The NRF assumes an optimistic tone by

noting several economic indicators pointing to a solid holiday

seasonincluding 14 months o retail sales growth and a

substantial reduction in household debt.

Nevertheless, continued uncertainty over the stock market,

higher gas and ood prices, and sputtering job growth

will dampen spending this holiday season, the NRF has

predicted. Furthermore, the strong 2010 holiday season, which

outperormed most analysts expectations, sets a higher base

or growth this year. The trade group added that retailers will

count on strong promotions and lean inventory levels to help

them overcome consumer caution this holiday season.

While businesses remain concerned overthe viability o the economic recovery,there is no doubt that the retail industry

is in a better position this year to handleconsumer uncertainty than it was in 2008and 2009.Matthew Shay, president and CEO of theNRF, in a press release, October 2011

Deloitte

Holiday sales will reach between $873 and $877 billion,

representing a 2.5% to 3.0% increase in the November 2011 to

January 2012 holiday season, Deloitte predicted. Alison Paul,

vice chairman and US retail and distribution sector leader at

the rm, noted that while economic events could depress

consumer spending this season, businesses are already

operating at lean and ecient inventory levels. However, Paul

advised retailers to be prepared with contingency plans.

Retailers need to be nimble enough to quickly

adapt and adjust their inventory, assortment,pricing and promotional strategies whenconsumer demand fuctuates.Alison Paul, vicechairman and US retail & distribution sector leader at Deloitte,

in a press release, September 2011

Deloitte said double-digit growth in non-store channels

was giving the retail industry a major boost and suggested

multichannel retailers that successully use their online

channel to augment the in-store shopping experience will

have the advantage.

Store associates also have an important role to play in

converting shoppers into buyers and upselling. This requires

that they be well versed on the latest products, promotions,

pricing and competitor oerings that consumers receive

through online and mobile channels.

The brick-and-mortar store is still centralto the shopper experience. Retailersthat integrate the power o the sensoryexperience in-store with relevant, timelyinormation via their websites and mobileapplications are well-positioned to leadthe way this holiday season.Alison Paul,vice chairman and US retail & distribution sector leader at

Deloitte, in a press release, September 2011

Kantar Retail

Declining consumer condence will reduce store sales to

a modest 2.8% growth rate in the Q4 2011 holiday period,

predicted research and consulting rm Kantar Retail, as

reported by Internet Retailer. The strongest growth will come

rom dollar stores and jewelry stores. In contrast, sales will be

weak at home urnishings and consumer electronics stores.

The probability is high that this [decliningconsumer condence] will lead to another

recession unless some positive shock

such as government stimuluskeeps theperiod o heightened uncertainty short andquickly starts to lit consumer and businesscondence.Frank Badillo, senior economist at KantarRetail, quoted in Internet Retailer, September 2011



6/11


ShopperTrak

Retail sales will rise 3.0% but oot trac in stores will decrease

2.2% during the 2011 holiday season compared with last year,

said ShopperTrak, a provider o retail oot trac counting,

managed services and business analytics.

So ar this year, shoppers have visited an average o 3.1

stores per shopping trip, down rom 3.19 in 2010 and ar

less than the our to ve stores visited in early 2008, at theonset o the recession. As the number o in-store shoppers

declines, converting shoppers into buyers has never been

more important. ShopperTrak attributed reduced oot trac

to shoppers increasingly using the internet to research

purchases so that when they do walk into stores, they have a

purchasing strategy in place and are less likely to browse.

The persistently high unemploymentand uel rates, along with consumersconservative purchasing attitudes, willaect spending this holiday season more

than in recent years. Every shopper ina store will be more valuable than lastyear, and retail stores should be ready toconvert their holiday shoppers into sales.Bill Martin, co-founder of ShopperTrak, in a press

release, September 2011

Drivers o Online Sales

Strong holiday ecommerce sales stem rom more

consumers buying online and greater spending per

online buyer. Leading the charge will be higher-income

consumers, who have embraced ecommerce and

spend a signicant share o their total git budget on

retail sites. But mobile shoppers will also propel holiday

ecommerce sales, especially those who use their

smartphones in-store to compare prices and products

at other retailers.

More Online Buyers

An annual holiday survey by BIGresearch conducted or the

NRF tracks the increase in online buyers. The percentage o

online consumers who said they planned to make holiday

purchases online grew rom 38.3% in 2004 to 46.7% in 2011.

% of respondents

US Internet Users Who Plan to Make HolidayPurchases Online, 2004-2011

2004

38.3%

2005

42.6%

2006

47.1%

2007

44.3%

2008

44.2%

2009

42.4%

2010

43.9%

2011

46.7%

Note: ages 18+Source: National Retail Federation (NRF), "2011 Holiday ConsumerIntentions and Actions Survey" conducted by BIGresearch, Oct 19, 2011




7/11


When sliced by income, the BIGresearch data revealed that

57.5% o online consumers with household income o $50,000

or more will shop online this holiday season, compared with

42.6% o consumers with incomes below $50,000.

% of respondents

Locations Where US Internet Users Plan to MakeHoliday Purchases, by Household Income, Oct 2011


8/11


Greater Spending per Online Buyer

The BIGresearch survey also revealed that online holiday

shoppers have been increasing the amount they planned to

spend online. This year online consumers expected to spend

an average o 36% o their holiday budget online, compared to

32.7% last year.

Percent of Holiday Shopping US Internet Users Planto Do Online, 2006-2011

2006

28.9%

2007

30.2%

2008

33.6%

2009

31.1%

2010

32.7%

2011

36.0%

Note: ages 18+Source: National Retail Federation (NRF), "2011 Holiday ConsumerIntentions and Actions Survey" conducted by BIGresearch, Oct 19, 2011


Since consumers are holding the line on their holiday budgets,

higher spending online means lower spending in other channels.

Nielsens survey illustrates this point. While only 5% o online

consumers planned to spend more on holiday shopping this year,

over three times as many higher-income shoppers (household

income o at least $100,000) and twice as many lower-income

shoppers (household income o $50,000 or less) planned tospend more online this holiday season compared to last year.

% of respondents

Locations Where US Internet Users Plan to SpendMore* for Holiday Gifts, by Household Income, Sep2011


9/11


Similarly, Deloitte ound that online holiday spending skewed

toward afuent consumers. Respondents with household

income o $100,000 or above intended to spend an average o

39.6% o their total dollars online, vs. an average o 31.3% or

shoppers with income below $100,000. Also, internet spending

no longer skews toward the youngest consumers. Deloitte

revealed online consumers ages 25 to 44 expected to spend

the largest share o total holiday dollars online.

% of respondents

Amount of Holiday Shopping US Internet Users Planto do Online, by Age and Income, Sep 2011


10/11


Some mobile purchases are likely to replace in-store

purchases. Accenture ound 40% o smartphone owners and

44% o tablet owners said they would use their device during

the holiday season to avoid crowded stores. And 40% o

respondents said it will be more convenient to use their tablet

than traditional holiday shopping methods.

% of respondents

Reasons US Internet Users* Would Holiday Shop Using

Their Mobile Device, Sep 2011

Compare prices while in a store

Better discounts/deals

Can stay out of crowded stores

Receive alerts when products are instore/stock

Receive mobile text reminders of sales

More convenient to use than traditionalshopping methods

Heard or read positive things and wantto try it

The technology has significantly improved

Easier to view and shop compared toa smartphone

Mobile phone orsmartphone

54%

43%

40%

32%

28%

27%

14%

13%

-

Tablet

35%

36%

44%

-

-

40%

21%

14%

26%

Note: *who intended to use mobile phone or tablet to make purchases orassist with holiday shoppingSource: Accenture, "2011 Holiday Shopping Survey - US Results," Oct 2011


Accenture also ound that 54% o respondents indicated they

would use their mobile phone to compare other retailers

prices while holiday shopping in a store. This eectively

turns a retailers store into a showroom or competing

online merchants.

Conclusions

While consumers are increasingly dependent on the

internet to meet their holiday shopping objectives,

ecommerce still has much room or growth.

A weak economy plays on ecommerces strengths.

Ecommerce is not immune to economic downturns, but it is

more insulated than the overall retail industry. Price-sensitive

consumers view online shopping as a way to nd better prices

and reduce gas expenses. Many o them plan to increase

their holiday purchases online. But even shoppers who intend

to buy in-store ater doing online research may ultimately

purchase rom retail sites that oers better deals.

Ecommerce has strong growth potential. While the

percentage o adult internet users who expect to make

holiday purchases online has increased over the years, the

penetration rate is still below 50%, according to BIGresearch.

That means the majority o online consumers have no plans to

make purchases on the internet this holiday season.

Even among people who do buy online, opportunities exist

to get them to buy more. Online consumers are expected

to spend one-third o their holiday budget on the internet

this year, according to Deloitte. However, consumers in

the 18 to 24 age range lag behind this rate. And older and

lower-income shoppers are underrepresented in the online

buyer population.

Mobile shopping is becoming a major ecommerce

revenue stream. Nearly hal o smartphone and tablet

owners plan to use their devices to purchase holiday gits this

season. Given the ast growth in device ownership, it is likelythat retailers will report signicant online sales coming rom

mobile users this holiday season.

Drivers of Online Sales


11/11


Related eMarketer Reports

Online Holiday Shopping Preview: What Retailers Needto Know

US Retail Ecommerce Forecast: Growth Opportunitiesin a Maturing Channel

Related Links

Accenture

Deloitte

National Retail Federation

Nielsen

US Department o Commerce (E-Stats)

About eMarketer

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Online Holiday Sales Forecast - eMarketer Nov 2011