Deloitte: Modest Increase Due in Holiday Retail Sales

Citing high gasoline prices and soft housing and job markets, consulting firm Deloitte LLP forecasts that retail sales for the November through January holiday season will rise between 3.5% and 4% this year, compared with a rise of 5.9% in 2011. The forecast does not include sales of motor vehicles or gasoline.

The firm's chief economist said:

While consumers turned out in the summer to give retailers solid gains for a few months, that pace may be difficult to sustain through the end of the year. Consumers and businesses alike may pause in advance of the election; however, retailers may benefit from a post-election consumer spending boost.

A couple of bright spots are a projected 15% to 17% rise in non-store sales and what Deloitte calls "mobile-influenced retail store sales." The firm notes that retailers that embrace the variety of channels open to consumers may do better than those that continue to fight the flight to virtual stores. A Deloitte executive offered this explanation:

Consumers should see more price transparency across mobile, online and store channels, and retailers will use these same channels to gain insights into their core customers' behavior. Retailers that interpret and respond to real-time information about shoppers can hit the right notes on pricing and promotions that drive traffic without eroding margins.

Stores should also welcome customers who use smartphones rather than fearing that customers are merely kicking the tires and using their mobile phones to buy elsewhere. Deloitte notes that in a recent study the firm found that shoppers who use smartphones are 14% more likely to make a purchase in the store:

The mobile channel is a powerful customer engagement tool, enabling retailers to capture a shopper's attention at the point-of-purchase, while gleaning valuable information about shopper behavior regardless of the shopper's location.

Deloitte's holiday sales forecast is slightly higher than others we have seen which predict a sales rise of 2.8% to 3%. According to the National Retail Federation, 2011 holiday sales rose 4.1% when compared with 2010 sales, based only on November and December sales.

Paul Ausick

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