More Spending More

It’s never too early in the year for retailers to prepare for the upcoming holiday season, and Brand Keys predicts 50 percent of shoppers will be spending their money on the Internet – representing a 15 percent increase over 2002. That spending will translate to an average of $710.00 per person, or roughly 9 percent more than last year.

Holiday USA Online Retail Sales Trends
4Q 2003	4Q 2002	4Q 2001	4Q 2000
$20.4 billion	$12.6 billion	$11.8 billion	$8.1 billion
Source: Brand Keys

Compounding the increase in online spending is information from Dieringer Research Group that indicates the far-reaching impact of the Web. The firm found that Internet-influenced offline spending is 50 percent greater than online spending – meaning that for every $1 spent online, the Internet influences $1.50 in brick-and-mortar sales.

Overall, U.S. consumers spent $137.6 billion offline in the last year, after first seeking information online, and online spending totaled $93.1 billion – roughly one-third less than Internet-influenced offline spending.

Dieringer’s survey of 2,000 U.S. consumers also revealed that 45 percent of online adults changed their opinions about certain brands, as a result of information found on the Internet. Furthermore, 60 percent of those who spend at least $500 per year both online and offline after seeking product info online said their brand opinions changed as a result of online information.

Further details of Dieringer’s report indicate that Net-influenced shoppers have overtaken catalog shoppers, with 15.8 orders per year online compared to 5.3 orders annually.

Retail spending, overall, is expected to grow, as the The Gallup Organization puts bigger spenders on almost equal footing with smaller spenders. A September 2003 poll of more than 1,000 U.S. adults found that 27 percent said they will decrease their spending over the next six months, while 25 percent plan to spend more. These figures are more favorable than they were in May 2003 when 28 percent planned to decrease spending and 19 percent were planning an increase.

More conservative estimates came from BIGresearch, which forecasts that 7 percent of consumers plan to spend more on presents, while 38 percent hoped to budget the same amount as last year.

Of the more than 7,500 consumers that were surveyed in early September 2003, 31 percent said they would be spending less, and they were more likely to be homeowners in the 35-to-54 age range, with families.