From the Washington Post online:
Retail trade group offers weak holiday forecast
By Anne D'Innocenzio, The Associated Press, 9/23/08
NEW YORK -- Holiday sales are expected to grow at the slowest pace in six years as shoppers worry about jobs, the housing and stock markets and high gas and food prices, according to a forecast from the National Retail Federation being released Tuesday.
The outlook from the retail trade group joins other weak holiday predictions issued so far that will likely lead to aggressive discounting and pre-Thanksgiving sales blitzes as stores try to pry dollars from frugal shoppers.
Merchants have also scaled back holiday inventories and seasonal sales staff from a year ago. The challenges are compounded by a holiday season that has five fewer days between Thanksgiving and Christmas Day than in 2007, which could make consumers delay their buying.
"You don't have a good picture," said Rosalind Wells, the NRF's chief economist. Last week's financial turbulence, from Lehman Brothers filing for bankruptcy protection to a proposed $700 billion government bailout of the financial system, "only increases the uncertainty and anxiety," she said. Wells said she doesn't expect an economic turnaround until the second half of next year.
The Washington-based trade association predicted that total holiday sales will rise a modest 2.2 percent for the November and December period from a year ago, to $470.4 billion. That would be below the ten-year average of 4.4 percent holiday sales growth and a bit below the 2.4 percent gain last year. It would also be the slowest pace since 1.3 percent in 2002.
Total retail sales figures from the NRF exclude business from auto dealers, gas stations, and restaurants. The estimate also excludes online sales and reflects last week's financial turmoil, Wells said.
Two other forecasts, from Deloitte LLP and TNS Retail Forward, that were made before the recent market turbulence had predicted the weakest holiday growth since 1991,though they use different metrics.
Deloitte LLP expects total holiday sales, excluding motor vehicles and gasoline, but including online sales, to rise 2.5 percent to 3 percent in the November through January period, less than last year's 3.4 percent gain. A rise of 2.5 percent to 2.8 percent in that period would be the smallest gain since 1991, Deloitte noted.
TNS Retail Forward, a global market information group, sees retail sales rising 1.5 percent in the October through December period, the weakest performance since 1991. The figure includes online sales but excludes sales from gas, supermarkets, restaurants, drug chains and autos.
The downbeat forecasts come as many retailers have already suffered from a weak fall shopping season. While autumn selling isn't a predictor of holiday sales, it's seen as a barometer of consumers' willingness to spend. And right now, shoppers don't seem to feel generous. While they have been squeezed by high gas and food prices, they are also contending with a weak job market and tighter credit. Last week's financial turbulence could further rattle people's confidence, which was near historic lows in August, according to the Conference Board. The group is expected to release its latest reading on Sept. 30.
Click to read the article in its entirety: http://www.washingtonpost.com/wp-dyn/content/article/2008/09/23/AR2008092300307_pf.html
This forecast means you must be ready for Holiday 2008! You cannot afford to wait until the last minute to plan your in-store events, sales, and specials.
Plan now for an Early Bird Special or other event on Black Friday – November 28, the day after Thanksgiving. Be ready to run on that day with your list of “Top 10 Holiday Gifts” for both men and women, plus a list for kids by age group. Post your list on your website and throughout your store.
Send e-mail blasts with coupons and other offers twice a month in October, November and December.
As the holidays get closer, set your speed bump displays (and merchandise outposts) with pre-wrapped gift items in a variety of price points. According to the article above, this year Target’s holiday marketing will focus on gifts under $25 – in this economy, that’s a good idea for you, too.
Give shoppers a reason to choose your store over another! On weekends, offer hot coca and cookies while they shop – FOOD IS GOOD!; gift wrap packages for free or for a nominal fee; check coats and packages so customers can shop hands-free; and be prepared to deliver incredible customer service.
If you don’t do these things, some other retailer will. Guess which store will be the busiest?