Holiday Forecast: Sales to Rise, But Less than 2010

In What's New, Industry News by Accessories Staff

Chicago—Two retail studies released this week predict 2011 holiday sales will rise only 3%, compared with 2010’s 4.1% gain—not exactly “tidings of comfort and joy” for retailers.

Retail analysts have predicted that due to continued unemployment, a rocky stock market and general unease about the economy will results in consumers’ being more cautious than ever—and spending less—in upcoming months.

According to ShopperTrak, which based its projections on a miss of foot traffic at malls and economic trends, retailers will have to step up “conversions” to come out ahead this holiday season. Not only will sales be down, but foot traffic will be 2.2% down from a year ago.

“The persistently high unemployment and fuel rates along with consumers’ conservative purchasing attitudes will affect spending this holiday season more than in recent years,” ShopperTrak co-founder Bill Martin said today. “Every shopper in a store will be more valuable than last year, and retail stores should be ready to convert their holiday shoppers into sales.”

ShopperTrak reported that so far this year, shoppers have visited an average of 3.10 stores per shopping trip, down from 3.19 per shopping trip in 2010 and far less than the four to five stores visited in early 2008 prior to the recession.

ShopperTrak’s forecast mirrors that of the The International Council of Shopping Centers (ICSC) which reported that it expects holiday sales to increase 2.2% this year, down from the 5% gain last November/December.

The ICSC forecast that November-December spending should reach $250.2 billion, the highest since the 2007 peak, when spending totaled $251.7 billion.

ICSC  also comparable store sales will rise 3.5% for holiday, slightly lower than the 3.8% posted  in 2010.

Apparel, Accessories, Luxurygoods Up

“The sales trends paint a continued picture of unevenness,” said Michael P. Niemira, ICSC’s chief economist. “Luxury spending continues to be strong and consistent. Wholesale clubs are doing very well. The mid-tier retailers are seeing mixed performance. And the low-end retailers are a bit more challenged.”

According to ShopperTrak, the apparel and accessories sales will increase 2.7% while its foot traffic will decline 1.1% compared to holiday 2010.

“While consumers are expected to buy a bit more this holiday season than last, they are increasingly sensitive to value,” ShopperTrak reported. “Lower-end apparel and accessories specialty stores may be pressured to reduce prices to compete with discount chains.  Higher-end stores, however, may have an advantage this season as shoppers seek quality purchases offering perceived value and longevity of use.

“Retailers who pay close attention to their browser to buyer conversion rates and adjust their product offerings, store layouts and staff scheduling to improve those rates will be the most successful this year, ” Martin added.

By retail channel, Niemira predicted that luxury retailers will perform best, achieving a 7.5% gain in comparable store sales for the holiday period. Discounters will likely see a more modest 2.5% growth.






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