This holiday season, Web sales are retailers' biggest gift

By Frank Ahrens
Washington Post Staff Writer
Tuesday, December 29, 2009

Consumers spent a little more than anticipated during the holiday season, according to a report out on Monday, and a significant e-tail threshold may have been crossed on Christmas Day at Amazon, the online bookseller.

For the first time ever, online sales of e-books on Christmas Day exceeded sales of physical books at Amazon, the company said on Monday.

Overall, retail spending from Nov. 1 to Dec. 24 rose 3.6 percent compared with the corresponding period last year, according to MasterCard's SpendingPulse survey, which tracks all retail spending, including cash transactions.

The increase was partly attributable to one extra shopping day in 2009. Even removing that day, retail spending still beat last year's performance, when recession-dampened sales slumped 2.3 percent compared with the 2007 period.

This year's results also bested expectations, which forecast a 1 percent slump in holiday spending across November and December, compared with last year's historically bad results.

"While up is good, it wasn't going to take much" to beat 2008 holiday spending, said Miller Tabak equity strategist Peter Boockvar. "Things are better but still sluggish, and consumers are still fervently looking for sales."

Boockvar pointed to reports Monday of people returning gifts in exchange for cash to buy necessities as "a sign that the labor market and people's pocketbooks are still very uncertain."

According to government data, consumer spending makes up about 70 percent of U.S. gross domestic product. The biggest jump in 2009 holiday retail spending happened online, where purchases rose 15.5 percent compared with last year, the survey said. They now account for about 10 percent of all retail sales.

Contributing to the online surge were electronic book purchases from Amazon, meant for use on the company's Kindle reading device.

Amazon, however, does not release sales figures on Kindle sales, nor on e-books sold on Christmas Day.

Using built-in wireless technology and an electronic display, the Kindle lets users download digitized books, blogs, magazines and newspapers in almost any location and read them on the device's six-inch screen immediately.

Amazon introduced the Kindle in 2007. The peak in e-book purchases on Christmas Day indicates that a number of Kindles were given as Christmas presents and were used to buy books that day. In a release, Amazon chief executive Jeff Bezos called the Kindle, which sells for $259, the "most-gifted item ever in our history."

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