Social networks boost online holiday sales

Despite dismal holiday sales forecasts, online sales are surging this season and retailers are using social networks and iPhone applications to maintain momentum.

Brick-and-mortar retail stores including Macy’s Inc., Best Buy Co., J.C. Penney Co. and Staples Inc. are using Twitter, Facebook and YouTube to generate online buzz, luring shoppers to their stores and Web sites with special sales and promotions. More than half of retailers are including social networks in their marketing strategies today, up from 4 percent in 2007, according to a survey by BDO Seidman.

Online buying is projected to increase 8 percent this holiday season, up from a 5 percent gain a year ago, according to Forrester Research. The uptick is causing retailers to spice up their online offerings with sweepstakes and special promotions for the Web-savvy shopper.

For example, Staples is offering Twitter “followers” an opportunity to win a $1,000 Hewlett-Packard laptop and printer as part of its Daily Tech Giveaway sweepstakes. Old Navy’s Facebook fan page, which has more than 354,000 fans, is offering men’s crew and V-neck T-shirts for $8 instead of the regular price of $16.50.

Social networks have added price-based grazing, shopping with virtual friends and “preview dating” hot products to the online shopping experience, said Marian Salzman, president of Euro RSCG Worldwide PR, a marketing communications firm.

“Social networks let people connect with one another and retail and keep their shopping communal,” Ms. Salzman said. “In the Twittersphere, consumers looking for bargains own the day. They are in charge and can band together to maximize their own power.”

Spurred by Cyber Monday’s online discounts, online holiday spending totaled $16 billion as of Dec. 6, a 3 percent increase over last year’s pace, said comScore Inc., a Reston, Va., market research firm.

Online holiday spending reached a 2009 peak of $4.6 billion last week, heavier than any week in 2008 but still below records set in 2007. Cyber Monday produced $887 million in online spending, up 5 percent compared with a year ago, matching the heaviest online spending day on record, according to comScore.

The 5 percent growth in Cyber Monday sales was driven primarily by an increase in the number of shoppers on the Internet, reflecting consumers’ increasing familiarity and comfort with online buying, analysts said. While the average online buyer spent about $100 this year, 2 percent less than last year, the number of online buyers grew by 6 percent to 8.7 million, according to comScore research.

While online spending still constitutes less than 5 percent of overall retail sales, according to retail consultant Howard Davidowitz, it has provided some relief to merchandisers combating sluggish in-store sales.

“Retail brick-and-mortar stores are not disappearing any time soon,” said Christian Gordun, chief executive of CouponCraze.com, an online coupon database for consumers. “People will always feel more comfortable in a store trying on clothes and leaving with them. But what is happening is that mainstream brick-and-mortar retail outlets have finally started to embrace the impact of online retail and marry the two together.”

Data collected by Mr. Gordun’s company indicate that six of the top 10 online retail outlets on Black Friday and Cyber Monday were traditional brick-and-mortar stores such as Target Corp., Sears Corp., Kohl’s Corp. and Macy’s.

Moreover, said Mr. Gordun, the Monday after Thanksgiving isn’t the only Monday before Christmas to find a hot deal. Shopping during “Green Mondays” also can benefit consumers, he said, referring to the two Mondays before Christmas.

“The next two Mondays, Dec. 14 and Dec. 21, tend to be Green Mondays,” said Mr. Gordun. “Merchants are finding that either they didn’t hit the sales goals that they wanted for Cyber Monday and Black Friday or there is leftover inventory that they want to get rid of. So they re-purpose themselves and extend promotions. Promotions available on the first Cyber Monday disappear and then return … to cater to shoppers that wait later in the season to shop.”

Dec. 14 and Dec. 21 are important days for other reasons, too. Dec. 14 ushers in the last week customers can order online with standard shipping and receive their gifts by Christmas. By Dec. 21, procrastinators will have to resort to overnight or second-day delivery, Mr. Gordun said.

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