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To: ~digs who wrote (530)	12/19/2002 4:58:15 PM
From: stockman_scott	Respond to of 6763

Online shopping shines this season December 19, 2002 (Reuters) — More consumers pointed and clicked through their holiday shopping lists this year, snapping up toys, DVD players and digital cameras as their comfort with online shopping continued to grow. In the heady days of the dot-com boom, some market watchers predicted the demise of the traditional brick and mortar retailer. While that did not happen, online shopping seems to be one of the few survivors of the technology bust. People are shopping online this year more than ever before and shifting more of their spending budgets to the Internet, analysts said. Nielsen/NetRatings said there has been a 44 percent increase in shopping online since the beginning of the season, with toys and consumer electronics posting double-digit growth. ``We are finally seeing a true shift of offline to online,'' said Patrick Gates, senior vice president of commerce for America Online, a unit of AOL Time Warner. ``Overall growth for (offline retail) is expected to be 4 percent and online is going to be up about 20 to 30 percent. The pie isn't getting bigger, people are shifting share.'' In 2005, Christian Dussart of MIT's Sloan School of Management expects online sales to exceed 5 percent of total retail sales and surpass catalog sales. Bargains, convenience and the ability to comparison shop contribute to the growth expectations. ``The problem for manufacturers and retailers is that the Internet is helping people become more price conscious and they can shop around,'' Dussart said. ``Margins are shrinking and price is becoming much more important than brand.'' CLICKS AND BRICKS America Online's Gates attributed some of the growth to the fact that some of the old-style retailers have finally figured out how to succeed online, with consistent messaging on the Web and in the stores and connected customer service, for example. Retailers this year are making it possible for customers to buy or reserve items online and then pick it up at their local store — another factor in the growth this far, analysts said. Free shipping has also helped, taking away the perception there is a penalty to buy online, Strand said. ``Sites that offer free shipping, which is increasing to almost all sites, and sites that sell books, toys, apparel and music are really the ones that are likely seeing the heaviest sales,'' said Jupiter Research analyst Ken Cassar. Still, some are bit more tempered about the growth. ``Even though it looks like it's going to be a great year for e-retail sales, we're still estimating e-retail sales will only be 1.4 percent of total retail sales (excluding travel) for the quarter, up from 1.3 percent a year ago,'' said Mary Brett Whitfield, senior vice president with Retail Forward. She does not expect total online sales comprising more than 4 percent to 5 percent of total sales in the next five to six years. Online retailing is still operating off a very small base — with $10 billion to $12 billion per quarter for the entire industry compared to the $1.43 billion Wal-Mart Stores Inc. tallied on the Friday after Thanksgiving, Whitfield said. Nielsen/NetRating's Strand said the majority of sales are still made in brick and mortar stores. About 75 percent of people known to shop online say over 75 percent of their purchases were made in stores, Strand said. While more dollars will be spent online, Strand said the industry is expecting a muted season because of sentiment as spending budgets have not increased much from last year. THE HOME STRETCH While Wednesday was the deadline for most online shoppers who wanted to avoid paying for express shipping, brick and mortar retailers still have almost a week left in the season. A poll recently conducted on the AOL service found that, of its 1.8 million respondents, 34 percent had not even started shopping by this past weekend. As a whole, retailers have been having a rough season. Earlier this week, many U.S. retailers reported another week of dismal weekly sales, leading them to discount merchandise in order to reach holiday sales targets. After a strong start on ``Black Friday,'' the day after Thanksgiving and the traditional start to the holiday shopping season, retailers are still trying to woo consumers into stores with heavy ad campaigns and deep discounts on items like electronics, compact discs, clothing, jewelry and appliances. Retailers ring up about a quarter of their annual sales in November and December and for some specialty retailers, such as electronics stores and apparel chains, the two-month period accounts for the bulk of full-year profits.