Consumers will spend a bit more this holiday shopping season, but there will be fewer of them in stores, predicts research firm ShopperTrak, which describes itself as "the world's largest provider of retail foot traffic counting, managed services and business analytics." The company forecasts that national retail sales will rise 3% during November and December compared to the year before, but foot traffic will fall 2.2%.
Holiday sales generally account for about one-fifth of overall annual revenue for retail stores, so the outcome of the season can be the difference between a profitable year and an unprofitable one. "The persistently high unemployment and fuel rates, along with consumers' conservative purchasing attitudes, will affect spending this holiday season more than in recent years," said ShopperTrak co-founder Bill Martin. "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 expects apparel and accessory sales to rise 2.7%. The firm said apparel sellers may have to drop prices to drive sales -- which, of course, can hurt profitability nearly as much as slow sales. The cost of clothing inventory has been driven higher by increased costs of commodities such as cotton.
With few new "blockbuster" products coming out from the consumer electronics industry this season, its sales gains are expected to be weaker than the overall trend. ShopperTrak predicts the Electronics and Appliance sector's sales will rise by 1.2% year-over-year.
Retailers and the industry as a whole battled for profitability in 2008 and 2009, often without much success. Then came 2010, a slight recovery year. If ShopperTrak's prediction bears out, 2011 will be follow suit, but retailers will be working harder for every sale, and every shopper.
ShopperTrak measures foot traffic in more than 25,000 stores in the United States and analyzes the data in a proprietary econometric model to create its National Retail Sales Estimate.