Online sales strong, but e-retailers cautious on spending

Computerworld - This year's online holiday shopping season may be used as a barometer to gauge the effects of the economic downturn and the tragic events of Sept. 11.

Early signs are that the season is progressing about as predicted -- from growth in online sales to the scaling back of major IT projects retailers put on the back burner in the face of grim financial times.

Nielsen/NetRatings Inc. in Milpitas, Calif., hasn't revised its estimates that 106 million consumers will shop online this year, an increase of 27% from last year, and that they will spend $10 billion, a 43% increase over spending a year ago. Traffic soared 59% from the last week of October to the week ended Dec. 2, compared with 62% during a similar period last year.

"This year is shaping up to be a year of business as usual, dealing with very challenging economic times," said Lisa Strand, director and chief analyst at Nielsen/NetRatings.

San Jose-based GartnerG2, a research unit of Stamford, Conn.-based Gartner Inc., tweaked its $11.9 billion fourth-quarter projection only "a hair" downward after the Sept. 11 terrorist attacks on the U.S., research director David Schehr said.

"It should be, within the U.S., a year of nice, reasonable, steady organic growth as more and more consumers begin to use the Internet for at least some of their holiday buying," Schehr predicted.

But few retailers were able to complete any of the major IT projects that they had undertaken. Gartner analyst Geri Spieler said clients attending her firm's retail conference the week before Sept. 11 reported they hadn't done any significant work to improve their Web sites "because they knew the economy had gone down." Spieler said some retailers beefed up servers, redesigned sites to improve navigation and finished scheduled projects, "but they did not go ahead with things like real-time inventory."

Few Trailblazers

Sears, Roebuck and Co. stands in marked contrast. For the first time, the Hoffman Estates, Ill.-based retailer is giving holiday shoppers the chance to order online and pick up items in its stores.

To offer that capability, Sears had to implement technology to enable near-real-time inventory checks so customers can determine whether an item is in stock at a given store, said Ann Woolman, a spokeswoman for the retailer. The item is then plucked from the shelf and sent to merchandise pickup, triggering an e-mail confirmation to the customer, she explained.

Sears now joins trailblazer Richmond, Va.-based Circuit City Stores Inc. as one of the few retailers that can perform the inventory