Merchants Look To Cyber Monday For Sales
Retailers are hoping last week's strong start to the holiday shopping season at malls and stores translates into a busy buying season online, which officially begins Monday.
The Monday after Thanksgiving, tagged "Cyber Monday" by the National Retail Federation, is when many consumers return to their work computers - and most online shopping is done at work.
"It's the beginning of the real surge in online spending," Patrick Byrne, CEO of Overstock.com, told CBS News.
On the other hand, "what we've been seeing this year so far are early sales, so Cyber Monday may not be as important as it has in the past," says CBSNews.com technical analyst Larry Magid. "Besides, people tend to shop a lot online throughout the entire holiday season, so we'll probably see a steady increase in online shopping over the next several days."
"We see about 35 percent of our annual volume actually occur in about 4-5 weeks leading up to Christmas," said Byrne. "It's really when the tide comes in for us."
A number of retailers are hosting one-day sales or special offers for the occasion. Internet research firm comScore Inc. estimated online sales may exceed $700 million online on Monday.
As for brick-and-mortar outlets, ShopperTrak RCT Corp., which tracks total sales at more than 50,000 retail outlets, reported late Sunday that sales on Friday and Saturday combined rose 7.2 percent to $16.4 billion from the same two-day period a year ago.
The biggest draw was electronics, benefiting chains like Best Buy Co. and discounters such as Wal-Mart Stores Inc. and Target Corp. Popular-priced department stores including J.C. Penney Co. and Kohl's Corp. drew in crowds with good deals.
Toy stores like Toys "R" Us Inc. fared well, too. Still, apparel sales appeared to be mixed at mall-based clothing stores, though a cold weather snap helped spur sales of outerwear and other winter-related items.
"This was a really good start," said Bill Martin, co-founder of ShopperTrak. "There seemed to be a lot of pent-up demand."
Now the attention moves online. Toys "R" Us Inc. will hold a one-day online sale and rival eToys.com will launch a two-day sale. Wal-Mart Stores Inc. will begin five days of online-only sales.
Online jeweler Blue Nile Inc. will give customers 20 percent off purchases paid through PayPal, eBay Inc.'s electronic payment division. Target Corp., Circuit City Stores Inc., Sears Holdings Corp., Crate & Barrel, the Discovery Store and Overstock.com Inc. are among dozens of retailers offering free shipping that day.
"The online community is getting more competitive as the amount of new customers slows," according to Scott Silverman, executive director of Shop.org, an online arm of the National Retail Federation. "Add to that the concerns about the economy, and promotions and sales provide a great way to get people excited."
Silverman said the number of retailers offering free shipping with no conditions, such as a minimum purchase, has jumped to 41.4 percent from 36 percent last year.
Nearly one-third of retailers are also having special one-day sales for Cyber Monday. Forty-two percent plan some kind of promotion, according to the NRF's annual survey.
In fact, the number of retailers hosting online deals on the Monday after Thanksgiving has surged to 72 percent of those polled from 42 percent just two years ago.
Despite a decent showing, many shoppers interviewed said they planned to curb their spending. Earl Lee, a mechanic from Live Oak, Fla., who was shopping in Tallahassee, said that he was planning on spending less this holiday season.
"Gas prices, everything's so high," he added.
John Muller, of Clifton, N.J., who was standing outside Macy's Herald Square in Manhattan on Sunday, said he plans to spend only about $500 this year, half as much as a year ago, because of higher expenses and worries about the economy.
This year, "we are mostly buying for the kids," said Muller, who has two children, ages 3 and 7.
"I think it's inevitable that we'll see a significant drop in consumption and that is going to have a serious impact on the economy," said Dean Baker, co-director of the Center for Economic and Policy Research.
The easy cash from home equity loans is drying up, reports CBS News correspondent Randall Pinkston. Banks are tightening the rules, forcing consumers short on cash to increasingly rely on credit cards, and that spells trouble.
"I see people with 30 (percent) and higher interest rates, which I would consider very high," said credit counselor Steve Burman.
While most consumers are still paying their credit card debt on time, delinquencies are rising, up nearly 7 per cent between August 2006 and 2007, reports Pinkston. Credit counselors say requests for assistance jumped from one million in 2005 to nearly three million so far this year.