MIXED SIGNALS ONLINE
Byline: Valerie Seckler
NEW YORK — Consumers may be spending more time at home since last month’s terrorist attacks, but whether their home shopping purchases have returned to normal depends on which data one believes.
Among a trio of U.S. consumer behavior studies released last week, one claims online spending has not recovered to pre-Sept. 11 levels and Internet B2C sales face a sharp decline this holiday versus last, while the other two state Internet purchases have returned to that mark and some Americans are planning to spend more the e-way during the next few months than they did a year ago. (During holiday 2000, online sales hit $10.8 billion, according to Jupiter Media Metrix; Forrester Research put the figure at $12 billion.) A Consumer Actions and Intentions Survey, conducted between Sept. 24 and Oct. 4 by Deloitte Research and BIGresearch, found Americans had spent less time than usual shopping at home during that period, both electronically and via catalogs. During the 11-day survey, 25 percent of the 5,100 consumers polled said they were spending less time shopping at home, which they attributed, in part, to spending more time watching the news on TV.
In addition, approximately one-third have spent less money in upscale specialty stores since Sept. 11, and about one in five are shopping less at traditional department stores.
The downtrend in home shopping was unexpected at a time when security matters are on the minds of many and is one that caught Carl Steidtmann, Deloitte Research chief economist, by surprise. “One thing that was kind of interesting in the data — and counterintuitive — is that people said they’d be shopping less on the Internet and by mail order this holiday compared with last,” Steidtmann said.
While 8.8 percent of consumers surveyed said they plan to spend more money shopping online this holiday, 23.1 percent plan to spend less — a variance of a worrisome 14 percent.
Steidtmann’s take on the phenomenon? “The downshift in plans to shop at home is being driven less by the shock of Sept. 11 and more by the fundamentals of the economy, particularly the big rise in unemployment claims over the last month,” the economist pointed out. “There have been 150,000 layoffs in the past few weeks. Plus, Christmas travel plans have been abandoned by 11 percent of U.S. consumers, which will affect another segment of retailers.”
However, if these downbeat numbers hold up through holiday, Steidtmann acknowledged, “They could reflect a real change in consumers’ attitudes toward materialism that has been brought on by the tragedies of Sept. 11.”
As for holiday shopping overall, 29 percent plan to spend less than they did during holiday 2000 and only 8.8 percent plan to spend more, a 20 percent spread that’s even wider than that in planned Internet spending. “While consumers are not always objective or accurate in their assessment of future spending, the sheer size of the gap between those who plan to spend more and those who will spend less is daunting,” Steidtmann noted. These expectations of spending declines coincide with Deloitte Research’s recent holiday forecast, a projected 1 percent decrease in total sales, in a season some expect to be the roughest since 1981.
Nearly three-quarters of the 5,100 people polled in the Consumer Actions and Intentions survey said they are acting on President Bush’s encouragement to return to their normal lifestyles and spending patterns, a part of their patriotic duty. Those who do not see spending as a patriotic act tend to be older and better educated, and many of them have first-hand memories of rationing or doing without various conveniences during World War II. Roughly 15 percent of respondents plan to spend more on home improvement in coming months and 14 percent plan to spend more on home furnishings. In contrast, nearly 25 percent expect to buy less “dress-up” clothing over the next 90 days and 22 percent say they likely will be going out to eat less.
“It appears the comforts of home have taken on an added importance,” Steidtmann observed. “Accordingly, as consumers make a lifestyle shift toward more time at home, their spending on food, books, music and home improvement and entertainment will change.”
A different picture has been painted in surveys taken by cyber-credit purveyor NextCard and e-commerce services provider Vividence, which found, respectively, that the number of ‘Net credit card transactions has returned to pre-attack levels and that Americans plan to spend more online this holiday than last.
In its recently completed “Holiday Readiness Survey,” Vividence found:
In answer to a question it posed after Sept. 11, safety emerged as the chief reason people plan to do more holiday shopping online than last year, with 31 percent citing that concern.
While 34 percent of respondents plan to spend less money this holiday than last, 37 percent plan to shop online more.
Roughly 90 percent of those polled plan to spend at least some money online this season.
“After an expected drop following Sept. 11, online consumer spending rebounded at the end of the month,” said Scott Lascelles, group vice president of loyalty marketing at NextCard. “September transaction volume ended at approximately the same level as August, a good indicator that consumers are returning to previous online shopping patterns.”
The caveat in those numbers is that NextCard’s monthly eCommerce Index — which tracks sales of the 20 sites transacting the most purchases via NextCard instruments — is that the average transaction size at various sites declined in September, compared with this summer and full-year 2000, and some of the best performers are value-oriented or outright discounters. With the sharp drop in airline travel, for instance, Priceline.com’s average September transaction of $190.07 fell 17 percent below its combined July-Aug. average of $228.81 and 38 percent short of its average for 2000. Discounter Buy.com — which offers an eclectic assortment of consumer electronics and entertainment, activewear, sporting goods, jewelry and diamonds — has not recovered to summer levels either, with its average September ticket of $94.85 coming in 6 percent shy of its combined July-Aug. average of $100.97, but it still did better than its average purchase of $88.47 during 2000.
The NextCard index is based on the e-transactions of more than one million of its credit card holders.
While fashion stores saw sharp sales slumps in September, three Web sites making NextCard’s Top 20 list for September are the source of numerous apparel, accessories, and jewelry sales: HomeShoppingNetwork, which ranked ninth; AOL Shopping, one of the first sites to finesse its apparel merchandising, ranking 14th, and Old Navy, which came in at 19th.
AOL Shopping also was the eCommerce Index’s fifth-biggest gainer in September, seeing its volume of NextCard transactions rise 31 percent over August. Kmart’s BlueLight.com, now operated by burgeoning e-commerce services provider Global Sports, was the second biggest gainer, behind discount bookstore eCampus.com, with a surge of 161 percent.