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The Internet grows up

Bricks and mortar retailers have been suffering as a result of the recession and consumer uncertainty after the attacks of September 11. They have struggled this holiday season to eek out gains of 1% or 2% according to reports. Hope is not lost for the economy however because electronic commerce has scored enormous gains.

Terrorism has changed the playing field in this holiday shopping season. To avoid the risk of traveling and getting caught in a mall, people in record numbers have gone online to shop. To avoid carrying gifts on aircraft, thereby running into security problems, they have shopped online and shipped the gifts directly to the recipient.

Industry reports a 50% year over year gain in Internet shopping when compared to last year's figures. This is in spite of an economic recession. Internet sales within the United States will easily top $100 billion for the year, helped along by Ossama bin Laden and his mostly dead men.

The wealth has been spread over many retailers, but is concentrated within the large, established players. Dell.com is by far the largest web retailer, with gains in sales measured in billions. This at least offsets the ongoing slowdown in corporate sales.

Amazon.com has also scored impressive gains and might even start to show a profit. The bottom line is simple. Traditional retailers are not only feeling the bite from the recession this year. They are feeling the heat from a fundamental shift in safe shopping.

You can not get killed by a terrorist or a drunk driver while shopping with your computer. You can fall on the ice and hurt your back. It is extremely unlikely that terrorists will directly target your home, unless you happen to be living in the Hancock building in Chicago (There are 40 floors of condominiums in this the third tallest building left in the US).

Overall, I think the numbers we will see from holiday sales will show a modest gain. The doomsday scenario that has the stock market jittery and people frightened probably won't be so bad. Happy Holidays.

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Shmuel Protter
investmenttool.com

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