For local retailers, the Internet can be a blessing or a curse during the holiday season. It can rob sales as shoppers scour online for the lowest price. But it can be a boon, by connecting retailers with customers outside of economically distressed Michigan and enticing customers to come into their brick and mortar stores.

While many Ann Arbor retailers say the Internet accounts for just a trickle of their holiday sales, others have embraced e-commerce as another avenue to find customers or as a way to protect against sagging store sales.

Tree Town Toys, a premium toy store on the north side of Ann Arbor, started out online and is now looking online to boost lackluster storefront sales in 2008. While online sales remained flat, the store took a beating last Christmas, a time that accounts for anywhere between 40 and 60 percent of annual sales, said owner Hans Masing.

“Last year we were tracking up until Thanksgiving, and then we saw a dramatic decline in the month of December.”

Holiday sales so far this year at the store? “It’s not our best year yet, and we don’t know if it’s going to be our worst,” Masing said. Masing is a contributor for AnnArbor.com's parenting section.

Tree Town Toys has tried to insulate itself by developing its Web presence. Under the name Dragonfly Depot, the company acts as a fulfillment center for on-line sales of other independent toy stores. Masing said he spent 2009 developing that end of the business, positioning it to see a three- to four-fold increase in Internet sales this year, he said. 

Dragonfly Depot has become the fulfillment center for a growing number of stores and organizations, such as Angel Tree, a national ministry that gives Christmas gifts to children with an incarcerated.

Dragonfly has increased its white label packaging, in which it ships and labels toys with the paperwork of its contracting business or organization, allowing the contractor to keep its brand, Masing said. “We have aggressively pursued white labeling.”

It’s too early to tell if Tree Town Toys will make a complete swing back to the Internet, Masing said. “I don’t know yet if that’s what’s happening. There are days when we realize that on-line is easier, but it’s not as satisfying. A lot depends on the holiday season. I’m not planning to not continue the bricks and mortar, but if this holiday season is like last year; we will be thinking very carefully about our options.”

Each year for the past decade, online sales for Hollander’s decorative paper and bookbinding supplies have increased. Their annual October online sale was the best ever, said owners Tom and Cindy Hollander, which could be a good omen for the coming holiday. 

The Web accounts for a growing share of the store’s annual sales, Tom Hollander said. About 30 percent of annual sales come from the Web and about 35 percent of holiday sales are on-line. On average, two staff people dedicate much of their day to filling on-line orders at Hollander's Kerrytown store.

The growing online sales have come despite the business's lack of advertising on the Internet, Tom Hollander said. One thing that helps: The business comes out near the top on unpaid Google searches for bookbinding and decorative paper.

The Internet isn’t making or breaking Found, a Kerrytown shop that sells old and new things found and reused. Owner Mary Cambruzzi said she doesn’t sell much from her site. But the site, along with Facebook and her blog, has drummed up traffic through her doors.

 “I can see traffic increase after I send something out,” she said. And that’s been good for the holidays. “I’ve been amazed by the rebound this year,” she said. October sales were up 50 percent over a year ago. “There’s been a strong start to this holiday season,” she said.

Sun and Snow Sports has been able to move last season’s styles discounted as clearance on its Internet sales site, said co-owner Heidi Parent. This will be only the second holiday season the business has sold online. It now has 75 percent of its inventory on the Web. 

It’s harder, she said, to sell full-priced merchandise. They continue to tweak their site, adding a feature that allows customers order online but pick up in-store.

Aunt Agatha’s, dealer of new and used mystery, detective and crime books in downtown Ann Arbor, sells books directly from its Web site and also through abebooks.com, said owner Jamie Agnew. 

Internet sales, especially for used books, increase about 20 percent each holiday. But sales off the business's Web site are modest, even with 40,000 monthly hits. 

What’s just as important is exposure, he said. An example: The national magazine Entertainment Weekly will be featuring Aunt Agatha’s in one of its featured lists. “They found us by nosing around on-line,” Agnew said. “The Internet is not a big part of sales. It’s more about the exposure.”

Read more AnnArbor.com shopping stories daily in our "Holiday '09" coverage, including items about local stores, national data and how area shoppers are navigating the season through Dec. 25 at www.AnnArbor.com/shopping.