Oct. 26, 2009 6:21 a.m.
WASHINGTON -- The economy is not only impacting shoppers, but online retailers as well. This holiday season, shoppers can expect to see changes in retail marketing and promotions.##M:[MORE]##

“Retailers know that times are tough so they have created promotions and incentives to help Americans save money this holiday season,” said Scott Silverman, executive director of Shop.org, which released its annual eHoliday Study conducted by BIGresearch. “From free shipping to Facebook, online retailers are combining new initiatives with tried-and-true tactics to make their companies stand out.”

With an understanding that many of today’s shoppers use Facebook and Twitter regularly and because these tools are more cost-effective than traditional advertising, 47.1% of retailers surveyed will be increasing their use of social media this holiday season. More than half said they have added or improved their Facebook page (60.3%) and Twitter pages (58.7%), while 65.6% have added or enhanced blogs and RSS feeds. In addition, to provide consumers with an extra incentive to start shopping, 34.3% say they will offer holiday deals earlier this year.

As another sign of the times, free shipping offers will abound. At some point in the season, 79.4% of retailers will offer free shipping with conditions -- meaning customers must purchase a specific item or spend a minimum dollar amount -- while 57.4% also plan to offer free shipping without conditions. Some 35.7% said their budgets for free shipping are higher than last year, and 30% said free shipping offers will start earlier than a year ago.

Online retailers also are compensating for the economy by making operational changes to help them protect their profits. According to the survey, 41.4% have scaled back on inventory levels and 22.9% have hired fewer people in their stores.

While online growth is expected to slow this holiday season, it remains a bright spot in retail; 45.8% of online retailers expect their holiday sales to increase at least 15% over last year, while 33.9% expect sales to grow up to 14%. As a testament to the economy and the maturity of online retail, just 20.3% expect sales to be flat or decline.

Largely because of the convenience of the Web, 26.7% of shoppers said they plan to spend a larger portion of their holiday budget online this year. Reasons why they are willing to spend more online range from the ability to shop at all hours of the day (41.9%) to shoppers feeling it is easier to compare prices (34%) to Americans’ insatiable appetite for free shipping (33.1%). Still others said they will spend more online because it’s simply more convenient for them (32.4%), they don’t want to fight crowds in stores (24.9%) or because it’s easier to find items (16.7%).

The small percentage of people (5.7%) who plan to spend less of their holiday budget online said that they’ll pull back because of expensive shipping charges (22.8%), because they like to see or handle items before they buy (12.5%) or because they prefer a store experience (10.8%). A fraction of shoppers said they hesitated to shop online due to concerns about security (1.1%), credit card theft (0.6%), privacy (0.1%) or concerns about retailers tracking online activity (0.1%).

“In a year where every penny counts, many people will start their holiday shopping online to find deals, search customer reviews to select products, and get gift ideas,” said Phil Rist, executive vice president, strategic initiatives, at BIGresearch. “The benefits of online shopping far outweigh the drawbacks, as far as most shoppers are concerned.”

With online retailers diversifying payment options, customers have more ways than ever to pay for holiday gifts. Fully 67.3% of shoppers will use a credit card for some online purchases this holiday season, though 35.6% also will use a debit card and 33.9% will use PayPal for purchases. In addition, 11.5% plan to use a gift card or gift certificate to pay for holiday items online this year.

Shop.org, is a division of the National Retail Federation. The 600 members include the 10 largest U.S. retailers and more than 60% of the Internet Retailer Top 100 E-Retailers.

Published by The Business Journal, Youngstown, Ohio