E-Tailing Was the Big Winner
Over the Holiday Season

Buoyed by deep discounts and continued strength in consumer spending, retail sales beat the analysts' low expectations for the 2001 holiday shopping season. Retailers had braced themselves for the worst Christmas in years, but the Salomon Smith Barney index of 50 retailers, weighted by sales, rose 4.5 percent in December, compared with a 0.2 percent decline in November and a 1.1 percent increase in December, 2000. The index far exceeded the performance during the 1990-91 recession. Consistent with the trend of recent years, discounters (e.g., Wal-Mart, Target, Costco) did better than department stores (e.g., Sears, Federated, May, Saks).

However, the big success story of this holiday season was the continued growth in internet shopping. Two of the Internet industry's major research firms reported that for the 2001 holiday season consumer visits to online retailers were up 50 percent and sales were up 15 percent over 2000. About 51 million people visited online shopping sites between the week of Thanksgiving and the weekend before Christmas according to Jupiter Media Metrix. The research firm's VP for media research, Charles Buchwalter, said "unlike 2000, when online shopping started strong but then fell off, online shopping this year started strong and ended even stronger." Separately, a joint research effort by Goldman Sachs, Harris Interactive and Nielsen/NetRatings estimated that Americans spend $13.8 billion online during November and December. More than one in five Internet users made a purchase online this season.

America Online said that online retail spending by its U.S. members (including travel) rose 72 percent to $11 billion for the entire fourth quarter, compared to one year earlier. For all of 2001, online spending by AOL members rose 67 percent to $33 billion. AOL's membership base in the U.S. is estimated to be about 25.3 million people.