Tepid growth forecast given for holiday sales

Consumer confidence is registering "positive" heading into what will be an extended holiday shopping period. But analysts predict retailers will have to work overtime to earn their share of sales amid a tepid 2.4% growth forecast by ShopperTrak analytics.

The shopper marketing firm expects overall sales to rise, while retail store traffic tail off some from last year.

“Although the economy continues to recover slowly, consumers remain cautious about spending and are not ready to splurge,” said ShopperTrak Founder Bill Martin. “Even though online buying increases each year, brick-and-mortar sales remain retail’s largest profit opportunity. Retailers who deliver a seamless experience both in-store and at every customer touch-point have the chance to capitalize and grab their share of wallet when shoppers visit the stores.”

Holiday sales and store shopper traffic historically account for about 20% of annual retail activity. This year’s sales increase builds on the 3% increase seen in 2012 versus 2011.

Retail giant Wal-Mart has already began touting its bargains on “kid-approved” toys, as well as undercutting Apple’s price on the much anticipated iPhone 5 updates with an aggressive upgrade campaign. The Bentonville-based retailer also opened its layaway program this past weekend with a price match guarantee in hopes of snagging buyers early, well ahead of Black Friday deals.

Toys R Us is offering cash rewards to consumers and the convenience of making layaway payments online.

K-Mart was the first to air holiday advertising in mid-September. Meanwhile email blasts and social media feeds touting early savings continue to bombard consumers from the specialty, general and warehouse club segments.

ShopperTrak said this holiday season isshorter with a reduced time window from Black Friday (Nov. 29) to Christmas Day (Dec. 25). As a result, ShopperTrak expects promotions will begin as early as the day after Halloween – the very start of the holiday season.

“Nobody can afford to procrastinate,” said Martin. “Retailers must have their holiday marketing and operations ready to go when November begins, as consumers will be ready to take advantage of those deals.”

According to ShopperTrak, sales and traffic in the apparel and electronics categories will mirror national trends. Retail sales in the historically popular apparel and accessories store category will increase 2.8% compared to 2012. Shopper traffic at apparel and accessories stores will decrease 1%.

ShopperTrak expects sales in the electronics and appliance store sector to increase 2% compared to last year, while shopper traffic will decrease by 1.2 %.

“These trends are just another indication of how the consumer has changed,” said Martin. “It is critical to remember that well over 90% of all retail sales in the United States will occur in brick-and-mortar stores. Keeping a close eye on their in-store shopper analytics will help retailers succeed this holiday season.”

Other economists predict American consumers are feeling more confident and perhaps willing to spend more this holiday season.

"Consumers are seeing positive signals from the economy which may buoy confidence heading into the holiday season this fall," said Alison Paul, vice chairman, Deloitte LLP and retail & distribution sector leader.  

She said retailers that merge consumer data from their e-commerce and in-store businesses to gain a more holistic view of their shoppers will be strategically positioned to capitalize on the upcoming holiday season. 

“They will also be better prepared to more appropriately target consumers — whether in-store or online — with the right marketing promotions to drive traffic and conversion," Paul said.