That puts pressure on brick-and-mortar retailers, which count on the holiday shopping season for up to 40 percent of their annual revenue, to find ways to get shoppers into their physical stores. That's becoming an increasingly difficult feat: The National Retail Federation, an industry trade group, estimates that overall sales in November and December will rise 4.1 percent this year to $586.1 billion, or about flat with last year's growth. Meanwhile, online sales are expected to rise 15 percent to $68.4 billion, according to Forrester Research.
“Retailers have to do a little more to grow sales this year,” said Frank Badillo, a senior economist at consultancy Kantar Retail.
This isn't the first time stores have had to up the ante. Big sales and door busters like deeply discounted TVs used to be the hallmark of the winter holiday shopping rush. But stores noticed over the last several years that Americans were cutting back on spending during the economic downturn, so they ramped up their discounting even more.
Shoppers became addicted to the ever bigger sales. And they began fleeing to online retailers, which can offer much cheaper prices than brick-and-mortar stores because they don't have the overhead costs of operating physical locations. Shoppers also began to appreciate something else about online retailers: They offer them the convenience of being able to shop within the comfort of their homes or office cubicles.
To better compete, brick-and-mortar stores figured that they'd have to replicate their online rivals' formula. Shopping in stores needs to be cheap and easy, they figured. This holiday season, they've expanded the scope and scale of those incentives to include extended hours, layaway plans, more shipping and return options, price matching on deals and updated shopping apps for smartphone users.