Forrester: Economy To Significantly Slow US Online Holiday Sales

eBusiness & Channel Strategy Professionals Need To Focus On Customer Retention

Cambridge, Mass., US online retail sales this holiday season will reach $44 billion, a 12 percent increase over last year and the slowest growth rate to date, according to Forrester Research, Inc. (Nasdaq: FORR). This year’s weakened growth is indicative of the difficult economic environment catching up with formerly resilient Web buyers.

Although US consumers are pessimistic about the health of the economy, they expressed a marked interest in the ability of the Web to save them money. Forty-eight percent of consumers surveyed, compared with 41 percent in 2007, said that they can find the best values and deals online. Additionally, 36 percent of consumers said that they would be more likely to shop online due to high gas prices, compared with 22 percent who expressed the same sentiment last year. Forrester expects that the majority of holiday online sales will be driven by shoppers who have previously purchased online, rather than first time online buyers.

“While eCommerce has traditionally been resistant to negative offline trends, growing concerns about the stability of the economy are finally affecting consumers’ online shopping decisions,” said Forrester Research Principal Analyst Sucharita Mulpuru. “This is going to be a very competitive online shopping season, so retailers should take immediate steps to bolster their customer retention strategies in order to ensure repeat purchases.”

More than two-thirds of consumers surveyed said that they are planning to spend more or about the same online as they did last year. Core holiday product categories such as clothing will remain top choices for online buyers, as well as books, DVDs/videos, music, gift certificates, and toys. Respondents also indicated that they will be seeking free shipping offers more often this year than last.

“A main attraction of the online shopping environment is the breadth of information that it offers,” said Patti Freeman Evans, Forrester Research Vice President and Research Director. “Retailers should expand their use of online marketing tactics on search engines and comparison-shopping sites since shoppers are likely to be researching the Web more thoroughly when deciding on this year’s holiday gifts.”

This year’s annual holiday forecast was a collaboration between Forrester Research and JupiterResearch, now a Forrester Research company. Two surveys were conducted to measure the attitudes and expectations of online consumers during the upcoming holiday shopping season, which was defined as the months of November and December. The first survey was fielded in September 2008 and received 2,153 individual responses. The second survey was fielded in early October 2008 and received 1,042 individual responses.

The report, “Outlook For US Online Holiday Sales, 2008,” directed at eBusiness & Channel Strategy professionals, is available to Forrester RoleView™ clients and can also be purchased directly at www.forrester.com/go?docid=47380. The report, “US Online Holiday Retail Forecast 2008: Maximizing Opportunity Within A Tough Retail Climate,” is available to JupiterResearch clients and can also be purchased directly at www.jupiterresearch.com/bin/item.pl/research:concept/107/id=100667.

About Forrester Research

Forrester Research, Inc. (Nasdaq: FORR)is an independent research company that provides pragmatic and forward-thinking advice to global leaders in business and technology. Forrester works with professionals in 19 key roles at major companies providing proprietary research, consumer insight, consulting, events, and peer-to-peer executive programs. For more than 25 years, Forrester has been making IT, marketing, and technology industry leaders successful every day. For more information, visit www.forrester.com.