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Pace of U.S. holiday Web sales slows

January 01, 2008|From Bloomberg News

Internet sales by U.S. retailers during the holiday season rose at their slowest pace as consumers grappled with $3-a-gallon gasoline and the worst housing slump in 16 years.

Online spending from Nov. 1 through Thursday increased 19% to almost $28 billion, from $24 billion a year earlier, Reston, Va.-based research firm ComScore Inc. said. Sales growth trailed last year's 26%.

At least the day after Christmas was good, with shoppers seeking deeper discounts at sites operated by Wal-Mart Stores Inc., the world's largest retailer, and Best Buy Co., the biggest U.S. consumer electronics chain, among others.

Online sales the day after Christmas totaled $545 million, more than double the revenue on the same day in 2006. ComScore said. "Consumers went shopping for price," said Kurt Barnard, president of Barnard's Retail Forecasting. "They looked at the price tag before they looked at the product."

Wal-Mart, Best Buy and Circuit City Stores Inc. offered discounts of 50% or more and promoted savings for in-store pickup of products purchased online to attract shoppers.

After-Christmas spending showed consumers "were willing, and able, to take advantage of late-season promotions and price discounts," ComScore Chairman Gian Fulgoni said.

Shoppers had an extra day this holiday season. There were 32 days between Thanksgiving and Christmas compared with 31 days a year earlier, ComScore said.

The slower growth mirrors the patterns in traditional retail sales. The 2007 holiday shopping season's sales may increase at the slowest pace in five years as consumers tighten household budgets because of record high oil prices and declines in home values. Spending in November and December may rise 4% this year, according to National Retail Federation estimates.

The Reuters/University of Michigan final index of consumer sentiment for December dropped to 75.5, the lowest since October 2005.

Customer visits at U.S. stores declined for the fourth straight week in the seven days through Dec. 22, the latest period reported on by Chicago-based ShopperTrak RCT Corp. Shoppers curtailed trips to malls in reaction to higher gasoline costs.

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