With credit tightening and consumer confidence shaky, you know this is going to be a tough year for holiday sales. A forecast that came out this morning from Lehman Brothers (now Barclays Capital), puts Internet sales over the upcoming holiday season growing at just 8 percent, compared to 19 percent growth last year (and 26 percent in 2006). That’s still better than the one percent growth in holiday ales expected at physical department stores, but the fourth quarter is make-or-break for many e-commerce sites and the slowdown in growth is not going to help.
A slowdown in demand will also hurt sites that depend on advertising, including Google (search in the fourth quarter is “largely driven by retail,” says the Barclays report. It is no wonder that other analysts are also beginning to cut back their expectations for Internet advertising revenues overall.
Despite the trimmed forecasts, the Internet remains the most likely sector to see the strongest growth in both retail sales and advertising. Just don’t get your hopes up too high.