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Christmas Retailers Feel Online Bite

Christmas 2016 was more Grinch than Santa for bricks-and-mortar retailers who suffered while consumers flocked to ecommerce sites to meet their shopping needs.

Holiday retail sales during November and December increased 4% over 2015 to $658.3 billion, according to the National Retail Federation. However, that number includes $122.9 billion in what NRF calls “non-store sales,” which it said were up 12.6% over the previous year.

Although online sales numbers were not yet available, NRF said it expects ecommerce sales racked up during the holiday season to show 16% growth year-over-year.

Prior to the holiday shopping season NRF had forecast retail sales of $655.8 billion, which would have been an increase of 3.6%. It also predicted that online sales would grow 7 and 10% to as much as $117 billion. (These numbers exclude automobiles, gasoline stations and restaurants.)

The International Council of Shopping Centers said consumers spent an average of $711 on gifts and other holiday-related items this holiday season.

This is 16% more than post-holiday results in 2015 ($611) and is 4% ($27) above holiday shoppers’ intentions measured by an ICSC consumer survey conducted last October.

A substantial boost in online sales also was reported by First Data, a company that provides ecommerce support systems It found that overall consumer spending growth increased 4.7% — but ecommerce transactions grew by 12%.

It also reported that more than one fifth (21.3%) of all holiday spending was conducted online, a substantial increase from the 15.4% share that was reported a year ago.

Department stores and clothing and accessories retailers took a hit, First Data noted. Department stores, in particular, were down 4.8% overall while clothing and accessories saw modest growth of 0.1%. Women’s ready-to-wear retailers saw a decline of 3.7% in year-over-year growth.

Electronics and appliances, on the other hand, saw significant growth this year, up 8.5% overall compared to being down 2.2% during the holidays last year, First Data points out.

“We continue to see a strong shift to online shopping and were impressed with the significant growth in ecommerce transactions,” says Rishi Chhabra, vice president, information & analytics, at First Data. “More and more, shoppers are opting to stay home to avoid the crowds and make purchases on their own time.”

Some retailers are becoming more savvy about leveraging their physical stores to support online sales, ICSC said, observing that 91% of holiday shoppers in 2016 spent their money at physical stores — the exact same percentage as 2015.

“The convergence of physical and digital continues to be important as consumers have come to expect an integrated experience allowing them to buy products through a variety of channels,” says ICSC President Tom McGee.

“The survey data proves that omnichannel retailers are the real winners this season as they offer purchasing options that satisfy the shopping behaviors of all generations,” he stresses.

NRF agrees. “There has been a lot of talk about online versus in-store retail in the past few months, but that comes from people who don’t realize that online and retail today are the same thing,” says NRF President Matthew Shay.

Retailers have accepted that they are living in a wired world, he adds. “In the new distributed commerce world that allows consumers to buy any product, anytime, anywhere, it really doesn’t matter whether a customer shops in a company’s store or on its website or mobile app. It’s all retail. Today’s retailers sell to shoppers any way they want to buy.”

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