October 22, 2008 / 4:12 AM / 11 years ago

Web holiday sales to post smallest rise: Forrester

SAN FRANCISCO (Reuters) - U.S. online sales are projected to grow 12 percent this holiday season, their lowest-ever jump, as consumers curb spending, Forrester Research predicted in a report released on Tuesday.

A person uses a computer keyboard in this undated file photo. REUTERS/Files

About one-third of online buyers plan to spend less this November and December than they did last year, the research group found.

“Inflationary prices on basic goods, tightened credit lines, and a growing number of corporate layoffs are looming economic pressures that necessitate a softened forecast,” said the report.

U.S. consumers have curtailed spending this year amid a global financial meltdown, credit crunch and lingering housing slump in the United States. Retailers have been squeezed as more shoppers cut back on their spending to save for necessities like gasoline and food.

Projections for the holiday season are closely watched by Wall Street, as the period can contribute as much as 40 percent of yearly profits for retailers, whether on- or off-line.

This season’s year-over-year expected rise to $44 billion will be driven by some one-fifth of current online buyers, who are expected to do even more of their shopping online.

A smaller percentage of new, first-time buyers discovering Internet shopping will also contribute to the smaller jump, said Forrester.

Last year, U.S. online holiday sales were $39 billion, representing an 18 percent increase over 2006.

Global online retailer Amazon.com will issue its forecast for holiday sales on Wednesday. Rival eBay Inc, the online auctioneer, last week predicted a weak holiday due to widespread softness in consumer spending.

Online sales are still a “bright spot in an otherwise weak retail arena,” Forrester said. The National Retail Federation has forecast a mere 2.2 percent rise in off-line holiday sales.

Still, online sales make up a mere fraction of overall retail sales. Last year, it was just 6 percent.

Over half of those surveyed said that free shipping offers would motivate them to spend more online this holiday.

“Free shipping offers are likely to become ubiquitous among retailers and harder to use as a differentiator this year than they have been in the past,” said the study.

Reporting by Alexandria Sage, editing by Leslie Gevirtz

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