The Holiday Season's Hottest Gifts

Consumers, Retailers Both Lean on Web for Tips on Shopping, Pricing

By Miguel Bustillo
The Wall Street Journal

A tablet computer for children, $299 headphones blessed by a rap icon, and tenaciously trendy sheepskin boots: Those are among the most popular items shoppers are seeking this holiday season, according to services that track online searches.

While online purchases make up less than 10% of retail spending, experts say consumers are increasingly doing their shopping homework via computers and smart-phones, making the data a valuable barometer of what products are resonating. Retailers pay tremendous attention to online searches, and pay to have their sites pop up at the top of those search results.

Amazon.com Inc. is drawing customers searching for tablets with its Kindle Fire, the most popular retail product in searches in the past four weeks, according to Experian Hitwise, which compiles its data by monitoring the online habits of 10 million U.S. internet users. Many consumers have been typing "Kindle versus Nook" to compare Amazon's tablet to Barnes & Noble Inc.'s new tablet.

Apple Inc. has been booming as consumers continue to lust for all it sells. But so has Best Buy Co., a retailer that fought a tide of slipping sales. Experian says Best Buy has lured customers thanks to promotions, including a recent "buy two and get one free" offer on popular videogames such as Activision Blizzard Inc.'s "Call of Duty: Modern Warfare 3."

Experian, which sells its market research to store chains, estimates that Web traffic in November jumped 19% at Amazon and 21% at Best Buy, while falling 15% at Target Corp.'s site.

With online searches proving to be a big window on consumer behavior, many retailers now employ consultants to monitor search and social-media results in real time and act on what they learn.

Wal-Mart Stores Inc. says it constantly analyzes search data, as well as Twitter and Facebook social conversations, to spot trends and optimize prices and selection on Walmart.com. Earlier this year, Wal-Mart attempted to gauge demand for potential hot sellers by placing some toys on its website for pre-order. It shared findings with manufacturers.

"What is fundamentally different today is the amount of real-time data retailers are getting," says Eric Best a former Amazon executive who now serves as chief executive of Mercent, a firm that advisers online merchants who sell their wares through Amazon.com.

Mercent provides a software tool for the merchants to recalibrate prices based on information about consumer Web searches and competitors' offers — it adjusts prices on roughly 2 million items per hour.

This year's search information reveals that customers are hunting for bargains even more aggressively than in the past, says Sameer Samat, vice president of product management at Google Inc.. He noted that Google searches for "Black Friday deal," which have grown steadily since the recession began, jumped 30% this season.

"There seems to be a big uptick in that type of behavior," Mr. Samat says. "These double-digit increases are definitely something to take notice of."

Tablet fever is fueling this season's toy sensation, the LeapPad learning device by Leapfrog Enterprises Inc., which has been selling online for up to twice its suggested retail price of $99 after it became scarce in stores. Google says the search phrase "tablets for kids" has increased 2,000% over last year.

Chief Executive John Barbour says Leapfrog is frantically ramping up production but warns that demand will exceed supply into next year. "We knew we had a great product," he says, "but I don't think anyone, us or the retailers, expected it to be this successful this quickly."

Other actively searched toys include the perennial favorites, Lego and Mattel Inc.'s Barbie dolls.

Another lusted-for item: Beats by Dr. Dre headphones, $299, created by the rap star Dr. Dre and Monster Cable Products Inc. A rival brand of headphones called Roc Nation Aviator, made by Skullcandy Inc. in conjunction with rapper Jay-Z, is also doing well, priced around $150.

Some hits of Christmas past have dropped off the most-wanted list, as tablets and e-readers have supplanted handheld videogame systems for kids, and laptops, home computers and televisions for adults.

As for apparel, the hot accessory, particularly among teen girls, has been around for well over a decade: Ugg boots. Made by Deckers Outdoor Corp., they were the most searched-for apparel item in the four weeks ending Dec. 3, Experian says.

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