Oct. 21 (Bloomberg) -- Web sites run by Macy’s Inc., Gap Inc. and Urban Outfitters Inc. may prop up retail sales this holiday season as discounts and online improvements drive more shoppers to their computers.

Macy’s reported a 15 percent increase in online sales for the month of September, compared with a 2.4 percent decline in total revenue. In the second quarter, the most recent period available, Gap’s online sales climbed 17 percent, compared with a 7.3 percent drop in total. Urban Outfitters Web sales also jumped 17 percent in that period, outpacing a 1 percent advance.

“There is momentum,” John Kyees, chief financial officer of Philadelphia-based Urban Outfitters, said in an interview. “With the recession and everyone being laid off, it’s probably easier to order from home and have it sent there rather than walking in the store and carrying a bunch of bags out.”

Retailers’ investments in sites, the ability to compare prices online and the decline of in-store inventories are fueling growth, according to George Whalin, president of Retail Management Consultants in Carlsbad, California. Consumers reluctant to splurge on clothes and shoes are increasingly hunting for bargains on the Web.

“Online sales are going to help propel us out of this recession,” Whalin said. “As we begin to get back to shopping and we begin to buy more, the online place is going to be the place we do it first just purely because of the convenience of it all.”

Wider Margins

While the Web accounted for less than 8 percent of U.S. apparel sales in the 12 months ended August, the shift may give retailers with the right strategies a boost to revenue. Online apparel sales climbed 2.2 percent in the period, compared with a 6 percent drop for the total $190.8 billion market, according to market researcher NPD Group Inc. in Port Washington, New York.

Online growth may also have a positive effect on retailers’ earnings and stock prices over time, said Adrienne Tennant, a specialty-apparel analyst at FBR Capital Markets Corp. in Arlington, Virginia. She estimates retailers’ operating margins from Web sales can be as much as 5 percentage points higher than in-store purchases.

Urban Outfitters’ online business produces the highest operating margins of all its divisions and will be key in helping to widen the company’s total operating margins to 20 percent or more over the next several years, said Kyees, 62. The company’s second-quarter operating margin was 17 percent.

‘Longer Runway’

The Web as a selling platform is a less mature business for many apparel retailers, said Howard Tubin, an analyst at RBC Capital Markets in New York.

“It’s got a longer runway to ramp up,” Tubin said. “A mall-based apparel retailer that launches a Web site can probably take the Web business to 10 percent of total revenue, roughly.”

Online sales at San Francisco-based Gap made up about 7 percent of total revenue in its second quarter. Aeropostale Inc., the New York-based retailer that has attracted shoppers with $12 hooded sweatshirts and $20 jeans this year, got 3.5 of its sales from the Web in that period. Urban Outfitters got 15 percent of its sales from the Web in its second quarter.

Retailers reduced orders this year after they were forced to mark down leftover merchandise by as much as 80 percent last holiday season. That has also driven consumers to the chains’ Web sites to search for and buy the sweater or pair of jeans they couldn’t locate in their local store.

“As we get further into fall, that’s going to become a real issue,” Whalin said of in-store inventory levels.

Inventory at department stores dropped 8.2 percent in the 12 months through August to the lowest level since at least 1992, according to Commerce Department data. Apparel retail inventory has dropped 8.4 percent in the same period.

Getting Comfortable

Consumers got more accustomed to shopping online when the price of gasoline rose to a record last year, said Tennant, the FBR analyst. The trend has continued even as gas prices have eased because more consumers now realize the benefits, she said.

Most sites allow customers to search by size to see if an item is in stock.

“It’s so much easier to just go online,” said Lori Kaplan, 40, a mother of three children in Westfield, New Jersey, who shops on sites including Nordstrom.com. “Why do I have to run around and see who has it, in what colors?”

Customer Feedback

Nordstrom Inc., the Seattle-based U.S. department-store chain with more than 100 locations, last year added a feature to its site that allows customers to make their purchase online and pick it up in the store.

“Our customers really responded well,” Jamie Nordstrom, 36, president of Nordstrom’s online unit, said in a telephone interview. “It’s clearly how a lot of them want to shop.”

In a survey of 1,000 consumers conducted by America’s Research Group last month, 62 percent of shoppers said they made purchases on the Web because they found a deal.

Urban Outfitters, also the owner of the Anthropologie chain, is currently advertising some clothing for $9.99 and offers free shipping on orders of more than $150. Macy’s is featuring free shipping with purchases of $99 or more.

Cincinnati-based Macy’s fell 90 cents, or 4.6 percent, to $18.88 at 4:15 p.m. in New York Stock Exchange composite trading. Aeropostale dropped 62 cents, or 1.5 percent, to $41.04. Gap lost 24 cents to $22.36. Nordstrom declined $1.38, or 3.9 percent, to $33.83. Urban Outfitters fell 35 cents, or 1.1 percent, to $32.33 in Nasdaq Stock Market trading.

Macy’s has worked to integrate its online and in-store businesses by offering a store inventory locator on its Web site, according to Jim Sluzewski, a company spokesman. The department-store retailer’s online sales have performed well for the last few years, even before the economy turned, he said.

More Investments

Retailers have invested in their Web sites during the last year to keep consumers’ interest and challenge Seattle-based Amazon.com Inc., the biggest online retailer. Amazon.com declined $1.56, or 1.6 percent, to $93.42.

Urban Outfitters is spending millions of dollars over the next three years to speed order processing and make other site enhancements, Kyees said in the interview.

Gap combined all its brands under one site in 2008 and added Athleta, a catalog and Web-only brand. The operator of the Old Navy and Banana Republic chains is also starting online businesses in Canada and the U.K., Gap said during an Oct. 15 investor conference. The retailer carries smaller and larger sizes on its Web site that aren’t available in stores.

“It’s about saving time and saving money,” said Thomas Harpointner, CEO of Atlanta-based retail consulting firm AIS Media Inc. “Convenience will always be a priority both in good and bad economic times.”

To contact the reporter on this story: Allison Abell Schwartz in New York at aabell@bloomberg.net.

Last Updated: October 21, 2009 16:39 EDT