Retailer Daily

Retail Forward Forecasts Tough Holidays

According to a forecast from retail intelligence firm Retail Forward, sales during the Q4 2009 holiday period will be flat compared to Q4 2008. While this is an improvement from the 4.5% sales drop experienced last year, 2009 is still expected to produce the second-worst holiday sales results in 42 years. Retail Forward’s prediction of flat holiday growth covers all retail channels except automotive, food, and drug. The company predicts that softer sales declines in August 2009 are indicative of a gradual economic recovery that will be driven by growing household confidence, but still result in poor holiday sales this year. In specific key sectors, Retail Forward expects apparel sales to decline about 2% in Q4 2009, compared to a 9% drop in Q4 2008. Mass retailers are expected to increase quarterly sales by 2.5%, compared to a 2% rise in the fourth quarter of last year. Home goods retailers are expected to see their quarterly sales decline by about 2%, compared with a 7.4% decline in Q4 2008. The largest improvement is anticipated in overall quarterly online sales, which are expected to grow 4% after shrinking 5% in the fourth quarter of last year. Other recent research also indicates this year’s holiday sales will likely be soft. According to a consumer study commissioned by online job site CareerBuilder.com, 61% of U.S. workers live paycheck-to-paycheck to make ends meet. These workers make no or minimal contributions to retirement accounts, and also tend to avoid all but the most necessary purchases. The study also indicated that few consumers, including more affluent consumers who do have disposable income, have a desire to start holiday shopping early this year. In addition, research firm Deloitte is also predicting flat holiday sales this year. Deloitte’s 2009 holiday forecastexpects total holiday sales to reach $810 billion, which would represent a 0% change in November - January holiday sales, excluding motor vehicles and gasoline, from last year. This would be an improvement from what Deloitte tracked as last season's 2.4% decrease, the first decline in holiday sales according to Deloitte's analysis of Commerce Department data dating back to 1967. Deloitte is also projecting the start of a slow recovery from the economic recession. In one other indication holiday sales will be sluggish this year, at least in the department store sector, according to the September American Express Spending and Saving Tracker update, 69% of consumers across all income levels said a department store discount would not be enough to motivate them to start holiday shopping early.