The competition over your money this holiday season is between mall retailers and cyber retailers

November 26, 1999
Web posted at: 10:20 p.m. EST (0320 GMT)

In this story: Speed, variety, price Billions of dollars at stake Internet can be as 'taxing' as stores Service a problem for stores RELATED STORIES, SITES

LOS ANGELES (CNN) -- Behind the annual holiday shopping scene, the competition is heating up between mall retailers and cyber retailers. E-commerce firms are advertising like never before, hoping to get a bigger piece of the fatter wallets shoppers are carrying at the end of 1999.

But Internet shopping remains only a fraction of all holiday sales, mainly because of consumers like Taylor Hull. She'll take the drive, overcrowded parking lots, crowds and screaming kids any day over shipping fees encountered on the Internet.

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And then there is the satisfaction of touching the prospective gift.

"I like to see it in person," said Hull. "Over the Internet, you see pictures -- you don't know exactly what you're getting."

Mall shopper Mary Anne Mastandrea says she's staying off line to preserve the holiday spirit.

"Online is very cold," said Mastandrea. "You're usually looking for a deal, or just basing it on price."

The American Express Retail Index of Consumers found 86 percent will stick to the malls for their shopping. Only 12 percent will surf and shop the Web, compared to 10 percent last year.

"Much of the population still doesn't have access to the Internet on a regular basis, and these people are not going to be customers until they come online," said University of Southern California professor of marketing David Stewart.

Speed, variety, price

Hull, left, likes to see the gifts she buys in person; Dellay prefers to tap the convenience of the Internet

However, as Internet shopping grows in popularity, retail merchants are eyeing shoppers like Vinnie Dellay, who says he'll do up to 75 percent of his Christmas shopping this year online.

"It's much faster," Dellay said. "There's no lines to wait on, and you get a better deal, usually, because you can shop nationwide."

Actually, you can shop worldwide, for everything from stocking stuffers to museum-quality paintings.

A French Internet company on Friday launched what it said would be the biggest online auction of major art works, including pieces by masters such as Picasso, Renoir and Man Ray. The collection is worth about $1.2 million.

The auction, called "French Eye on Art," runs until December 6, when results will be announced at Nart Inc.'s New York headquarters.

Billions of dollars at stake

Analysts expect traditional retail sales to increase about 5 percent this year over the $170 billion spent last holiday season.

E-commerce firms rang up $3 billion in online holiday sales last year. This season, according to industry analysts, 10 million newcomers will go online to shop, pushing projected online retail sales to between $6 billion and $9 billion.

Two CNN employees agreed to do some of their holiday shopping online for this story. Each made a purchase in less than 20 minutes -- no driving.

Internet can be as 'taxing' as stores

Example #1

A Krups Midnight Cocktail Millennium Drink Mixer retails at Bloomingdale's for $14.95, and shipping adds $5.95. But no sales tax is included.

In a phone call to Bloomingdale's, we were told we should have been taxed in California.

Shopping online does not mean you can escape sales tax, which is charged on all taxable goods, depending on state and local laws.

Example #2

Mall shoppers have to deal with overcrowded parking lots and long lines, while online buyers face shipping and handling fees

Banana Republic is another retailer with a complimentary Web site. There, though, you get an estimated sales tax, plus the $9 shipping fee for an estimated total.

Service a problem for stores

But when comparing mall shopping to www.WhatEverYouWant.com shopping -- perhaps consumer Don Jacobson sums it up best.

"If you're looking for convenience, (Internet) that's the way to go. If you're looking for the shopping experience and you're not sure exactly what you want, then I'd say, the mall's the place to be."

But, experts warn, expect some lousy service at the mall, because the booming economy has made it tougher for stores to find capable salespeople.

Richard Feinberg, a Purdue University professor of retailing, said many stores offer employees a bonus if they recommend a friend who gets hired too.

He also said some larger chains are putting their training programs on interactive CD-ROMs so the stores can train new employees anytime they want, seven days a week.

Correspondents Jennifer Auther, Jim Hill and Greg Lefevre and The Associated Press contributed to this report.

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