Far from a Ho Ho Ho kind of holiday shopping season, retailers this year will likely be faced with the weakest sales in years. Battered by the housing market downturn, surging fuel and food prices, a weakening job market, credit crunch and recent news of Lehman Brothers’ bankruptcy filing and struggles of major insurer AIG, consumers are opting to keep a tight rein on their pocketbooks.
In its annual forecast, TNS Retail Forward, a Columbus, OH-based retail think tank, forecasts a holiday shopping season that will be the weakest in 17 years. The group predicted that retail sales would grow 1.5% this year, as opposed to 2.7% last year. One of the largest slowdowns is expected in online sales, which grew 19% last year. The 2008 holiday season is predicted to generate 9% growth. Especially at risk are furniture and home-furnishing stores, home-goods stores and home-improvement stores.
Deloitte forecasts holiday retail sales will rise 2.5% to 3 % during the November to January period, less than last year’s 3-4% increase and possibly one of the smallest gains since a 2% increase in the 1991 holiday season.
“Consumers are in a cost-conscious mood and more focused on value than ever before,” said Stacy Janiak, Deloitte’s U.S. Retail leader. “Retailers that can offer unique value propositions—in terms of price, customer service, loyalty programs, or some other means—will be best positioned to attract the consumer’s attention. For example, many time-strapped consumers, who are now also feeling the pinch of higher gas prices, are seeking to make fewer shopping trips and may therefore be attracted by an efficient, streamlined multi-channel shopping experience.”
“Retailers can also take advantage of innovative marketing concepts, such as pop-up stores and an emphasis on `green’. These creative approaches may resonate with consumers, bring shoppers into stores and attract new customers, thus helping expand a retailer’s customer base.”
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