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Holiday Forecast: Continued Growth Of Online Sales

Some analysts think retailers are showing greater reluctance this year to drop prices online because the retail industry is struggling to remain profitable in the face of heightened competition and a weak economy. That, in turn, could affect sales growth.

"Consumers will buy less online when faced with fewer free shipping offers and percentage-off deals," Forrester analyst Carrie A. Johnson predicted in a report two weeks ago.

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Web shoppers appear to be extremely price sensitive; Forrester found that a surprising 73 percent of Web buyers surveyed thought anything they bought online should be cheaper than in stores.

No wonder online shoppers are flocking to comparison-shopping sites such as PriceGrabber, Shopping.com, NexTag and BizRate. They also are using bargain-finder and coupon services such as FindSavings.com, FatWallet.com and SlickDeals.net. And a bunch of new sites have launched to help Internet users find sales offline, including ShopLocal.com, Cairo and StepUp.com.

Yet ComScore senior vice president Daniel E. Hess sees the Internet continuing to grab a bigger share of consumers' wallets, especially because people increasingly are buying other types of products online than just books, CDs and electronics. Internet sales of jewelry and furniture are running at roughly double the growth rate of overall Internet sales this year, he said.

Both ComScore and Forrester said retailers appear to be trying harder to use the Internet to drive shoppers into stores, partly by aggressively promoting in-store pickups for items ordered online and also by working closely with comparison-shopping sites to advertise offline sales.

But I see the Internet continuing to put more price pressure on retailers. Last week, for example, I went to CircuitCity.com to order a spare digital camera battery for my father, one we had seen in his local Circuit City the week before. It was $49 online, the same as offline, but I decided to run a price check at Yahoo Shopping before clicking the "buy" button.

I was shocked at how many generic versions of the same battery were available for less than half Circuit City's price. I wound up buying two new batteries at eBay for $18, including shipping, and had them mailed directly to Dad in Ohio.

It's a small example, to be sure, but small changes can add up to major trends.

Leslie Walker's e-mail address is walkerl@washpost.com.

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