Holiday sales optimism

A Retail Compass survey by BDO Seidman suggests 2009 U.S. holiday sales will increase 2.6% over 2008, and same-store sales will increase 1.4%. The survey also found that 60% of the top 100 retailers surveyed expect an economic turnaround by the second quarter of 2010.

In 2008, the retailers included in the BDO Retail Compass survey predicted overall sales for the 2008 holiday season would decrease by 2.8%. According to the National Retail Federation, 2008 holiday retail sales were down 2.8% from the 2007 holiday season.

“Retailers remain cautious about the 2009 holiday season. While some Chief Marketing Officers have expressed optimism, unemployment is still a major concern and a majority of retailers are planning more discounts and promotions than last year,” Doug Hart, a Partner in the retail and consumer practice at BDO said in this statement. “However, retailers’ inventories are leaner going into the 2009 holidays. As a result, we can expect less panic this year — discounting will likely be moderate and more strategic than the deals we saw last year.”

The retailers in the study were among the largest in the country, excluding automotive dealers and restaurants, with revenues of more than $100 million, including 20 percent of the Top 100 retailers based on annual sales revenue. The survey was conducted in October of 2009.

OTHER SURVEY FINDINGS
• The vast majority of the retailers (77%) and nearly all of the retailers in the top 100 (85%) predict a turnaround before the third quarter of 2010.

• The survey found thta 96% of chief marketing officers (CMOs) expect to offer more discounts and promotions this holiday season, which is up from 88% last year and 73% in 2007.

• Forty-seven percent of CMOs expect overall sales to increase this holiday season when compared to last year, while 41% predict sales to be flat and only 12% say sales will decrease.

• When it comes to comparable store sales, 43% of the CMOs say sales will increase, while 47% expect sales to be flat and only 10% predict a decrease.

• When asked to pick one external issue that will have the greatest impact on the holiday shopping season, more than half (67%) of the CMOs, including 80% of the top 100 retailers, cite unemployment as the most critical issue. Other key issues are personal credit availability (17%), weak housing market (9%), energy and fuel costs (5%) and turmoil in the financial markets (2%).

• Nearly half (47%) of retailers say an economic turnaround will be most dependent on lower unemployment, which is up from 6% of retailers who cited lower unemployment in 2008. Other responses included a lift in consumer confidence (25%), a rebound in the housing market (14%), increased personal credit availability (9%), lower energy and fuel costs (3%) and a turnaround in the financial markets (2%).