Holiday Retail Spending Research Roundup

With only six more shopping days until Christmas, investors are busy navigating the often conflicting reports to assess the strength of the holiday shopping season.

ComScore reports that European eCommerce sites saw continued growth in early December. While the selling season began slowly for German shoppers, activity in Germany has rebounded, while France and the UK continue to see healthy online shopping. Electronics retailers were strong across all three countries. Toy and computer gaming sites gained robust traffic in the UK, while department store Arcandor led in online visits among both French and German users.

Video game consoles continue to be among the top gifts for 2007. And, while industry analysts are predicting a strong comeback for Sony’s Playstation 3 in 2008, it’s clear that, despite production woes, Nintendo’s Wii is dominating the field right now. According to Compete analyst Max Freiert:

Comparing this holiday season to last, the Wii has captured shoppers at levels consistently higher than during it’s launch week, for the last 4 weeks (approximately 1.4 million shoppers per week).

An emerging trend in eCommerce is the adoption of social shopping sites. Social shopping sites utilize user-generated content to drive purchases. Sites like Kaboodle and StyleHive allow users to share their preferences with like-minded peers, create wishlists and use bookmarking to see what others have recommended. According to Hitwise, while these sites today account for just a trickle of Internet traffic, their influence is growing. Says Hitwise research director Heather Dougherty:

Traffic to the custom category of Social Shopping sites was up 447% for the week ending Dec. 15, 2007 over the previous year. Among the social shopping sites, the leader is currently Kaboodle, with a 68% market share of total US visits to the category and traffic has increased 210% over the same week last year.

On the bricks and mortar front, leading electronics retailer Best Buy posted healthy third quarter results, with profit up 52% over the same period last year. Results were helped by more modest discounting and the calendar, which created an extra week’s worth of post-Thanksgiving shopping in the quarter. The Best Buy story is one of the few bright spots in the segment, as Circuit City is expected to announce a 3^rd quarter loss this Friday, while CompUSA announced the shuttering of its remaining stores. BMO Capital Markets analyst Rick Weinhart, while recognizing Best Buy’s strong performance in the quarter warns of tougher times to come:

4Q sales are expected to slow from 3Q’s bllstering pace, and we are increasingly concerned about what the sales environment will look like after the holiday gifting period ends and consumers have less of a reason to shop.

Spending on women’s apparel dropped nearly 6% during the first half of the Christmas season, compared with the same period last year, according to MasterCard Advisors, a division of the credit card company.

Analysts quoted by the New York Times blamed a rough economy, which has discouraged women — and mothers, in particular — from splurging on clothing for themselves and a lack of compelling fashions this winter.

The drop-off, which the credit card company described Sunday as “surprising,” bodes poorly for chains like Chico’s FAS and Ann Taylor, which specialize in women’s clothing, and could result in steeper-than-expected discounts on their merchandise in the final week before Christmas. In contrast, sales of men’s clothing rose 4.5 %.

MasterCard found that online spending had surged about 30% between Nov 23, known as Black Friday, and Dec 12, well above the average growth this year, and consistent with earlier reports from comScore. Spending on luxury items is up 10.8% and purchases of electronics rose a healthy 5.8%

Over all, holiday spending is expected to grow just 4% this year, the slowest growth rate in five years, according to the National Retail Federation.

Technorati Tags: (BBY), apparel, Best-Buy, eCommerce, Nintendo, research-roundup, retail

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Wednesday, December 19th, 2007 : Equity Research, Industry Research : No Comments

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