Holiday online spending grew 29%; annual online spending rose 26%

Online consumer retail spending for the holidays (excluding travel) grew 29% reaching $15.8 billion, according to comScore, a company that measures consumer behavior and attitude.

The figures exceeded the Reston, Va.-based company’s expectations of 23% to 26% growth for the holidays. The boost in holiday sales resulted in annual online retail sales of $66.5 billion, a 26% increase over sales in 2003. The company said jewelry was one of several categories that was a very strong performer for the holidays and the year.

A mid-season analysis conducted by comScore revealed that a group of 25 multi-channel retailers, or those conducting sales both online and offline, posted an aggregate year-over-year growth rate that was approximately twice that of online retail in total.

“While it’s clear that a broad range of online merchants saw a strong season, multi-channel retailers were standouts this year,” said Dan Hess, senior vice president of industry analysis, comScore Networks. “Many of the nation’s leading retail brands flexed their muscle this season, with strategies including faster delivery options, significant site redesigns and effective cross-channel promotions.”

A comScore Media Metrix analysis of online traffic to retail sites revealed that six of the top 15 gaining Retail properties over the holiday season were the online storefronts of traditional offline department stores, such as Home Depot, Neiman Marcus and Wal-Mart. Blockbuster’s launch of a DVD delivery service has boosted traffic nearly fourfold since 2003.

“Throughout the year, we saw strength in product categories such as Home & Garden, Flowers, Gifts & Greetings, Apparel & Accessories, and Jewelry & Watches, confirming the continued diversification of the online shopping basket,” adds Hess.

Unprecedented strength in the last two full weeks of December was perhaps the most interesting aspect of the 2004 holiday shopping season, according to comScore. Through mid-December, holiday season growth was tracking at 23%. Growth accelerated dramatically during the weeks ending Dec. 19 and Dec. 26, with sales growing by 57% and 53%, respectively.

The late surge, which resulted in the holiday season’s greater than expected growth, was driven by a number of factors, including:

* Local fulfillment: Retailers providing the ability to buy online and pick up in-store, as well as those offering local delivery, were able to offer consumers last-minute buying options as late as the day before Christmas.

* Later shipping deadlines: Operational improvements at major retailers allowed consumers to buy late in the week before Christmas and still have products delivered by Christmas Eve using standard shipping.

* Gift cards: Gift cards have become an increasingly popular gift option, both online and offline. And because these gifts can often be delivered instantly via e-mail, they were particularly popular during the week of Christmas.

* Offline product shortages: Widely reported shortages of popular gift products, such as Apple’s iPod, resulted in increased last-minute online purchasing of these products.

* Increased broadband access from home: comScore research has historically proven that consumers using broadband connections are more likely to make online purchases than their dial-up counterparts. As a result, in the 2004 holiday season, the year-over-year growth rate of online shopping from home was significantly higher than that generated by workplace buyers.

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