So Far, No Drop in Holiday Shopping

As holiday shopping begins in earnest, there's serious traffic at store cash registers. Purdue professor Richard Feinberg gives Sheilah Kast some perspective on a key time of year for U.S. retailers.

SHEILAH KAST, host:

From NPR News, this is WEEKEND EDITION. I'm Sheilah Kast.

There may be lots of leftover turkey to nibble on and a full slate of football games to watch this weekend, but millions of holiday shoppers are still crowding retail stores and malls. With credit cards at the ready, customers appear to be spending at a pace that reassures retailers the Grinch will not steal this Christmas. Richard Feinberg is a professor of consumer sciences and retailing at Purdue University's Retail Institute. We caught up with him on his cell phone while he was shopping at Castleton Square Mall in Indianapolis, Indiana. He described the scene.

Professor RICHARD FEINBERG (Purdue University): I see a lot of shoppers. The reports that I get is that shopping is good, at least comparable to last year, and last year was a very good year. But it's a very long shopping season and a lot of things can happen.

KAST: Are a lot of people just looking and wishing, or is there serious cash register activity going on?

Prof. FEINBERG: No, there's serious stuff going on. You know, most people have multiple shopping bags as well as eating something and drinking something and just walking around looking for the next thing to purchase, I think.

KAST: Well, is anecdotal evidence--has that turned out in the past to be a good indicator of what the season turns out to be?

Prof. FEINBERG: Clearly, every shopping day during this 30-day season is important. Retailers hope to get about $440 billion of shopping, and although 30 to 40 billion happens the first weekend, a lot of things have to happen in order for them to just get what they got last year.

KAST: The National Retail Federation was encouraged the gasoline prices fell back before the holiday season, but in much of the country, serious winter heating bills have not yet arrived. How big a factor might that turn out to be?

Prof. FEINBERG: Well, I think it's a gigantic factor. I don't think it's a factor consumers even consider yet. When we surveyed consumers about a week ago about what will influence their consumer spending at least in Indiana, we found out they didn't even list home heating oil prices. And that first bill is going to occur just when the shopping season gets its most serious, about the second week in December. And I think, you know, when middle-income consumers are paying $200 more this year than last year, that's going to have a significant impact. That comes right from their budget. You know, gasoline goes on credit cards, but home heating oil, that's right from the checking account.

KAST: The Internet is better established this year as a place where people shop. Do you expect to see an increase in holiday shopping on the Internet?

Prof. FEINBERG: Without doubt, Internet shopping will increase this year at least 25 percent. It increased last year about 28 percent, and for the foreseeable future, it'll increase in the double, double digits. But you know, it's still only 7 percent of all holiday shopping, and what we find is that the people who shop on the Internet are also the big store shoppers and that most of the Internet spending is going actually to store Internet sites. So the multichannel retailer is the one who's winning whether it's big mall shopping, store spending or Internet spending.

KAST: Some more Internet shopping doesn't really hurt the bricks-and-mortar stores?

Prof. FEINBERG: No. We're finding that the Internet shopper is the store shopper; the store shopper is the Internet shopper.

KAST: How does that support each other?

Prof. FEINBERG: Well, what we're finding is about 60 percent of all store shoppers will first go to the store Internet site, investigate what they have and what it looks like and then go into the store and actually buy it. So a strong Internet site for a store--it encourages people to come in and to purchase it. And there are some chains that have--you know, order it on the Internet and go pick it up at the store, and that's really what consumers want.

KAST: Now lots of people do their Internet shopping online at work. Is that going to hurt productivity in American industry and business in the next month?

Prof. FEINBERG: Well, it's one of the little dirty secrets of Internet shopping and that is Monday is now being called Cyber Monday. It will probably be the busiest Internet shopping day of the year. And the reason that people shop in the office and not at home is that most people in offices have broadbands, fast connections, while it is still not in over 50 percent of the homes. But that will catch up, and pretty soon people will do as much shopping on the Internet at home as they do in the office. But it does have--we can't even calculate the effect on productivity.

KAST: Richard Feinberg is a professor at Purdue University's Retail Institute. He spoke with us yesterday afternoon on a cell phone from Castleton Square Mall in Indianapolis, Indiana.

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