Deloitte Forecasts a 2 Percent Increase in Holiday Sales

Non-store Sales Expected to Brighten Retailers Holiday Spirit

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Sep 20, 2010, 09:00 ET

NEW YORK, Sept. 20 /PRNewswire/ -- With slow economic growth keeping household spending plans in check, retailers should anticipate a modest increase in 2010 holiday sales, Deloitte forecast today.

"Sustained weakness in the housing and employment markets continue to restrict consumer cash flow," said Carl Steidtmann, Deloitte's chief economist.

Steidtmann added, "Consumers discretionary funds have dwindled as households remain focused on reducing debt and increasing their savings, while banks continue to limit access to credit and stimulus checks have run out. Should consumers receive good tidings later this season in the way of falling energy prices or additional stock market gains, they may be able to lend retailers a bit more holiday cheer. However, given the unsteady pace of economic recovery, retailers should expect only a small uptick in holiday sales this year."

Deloitte's retail group expects total holiday sales to reach $852 billion(i), representing a 2 percent increase in November through January holiday sales, excluding motor vehicles and gasoline, over last season. This growth rate represents a slight improvement over last year's 1 percent gain.

"Non-store retailing, particularly e-commerce, is gearing up to be the bright spot in the holiday picture this year," said Alison Paul, vice chairman and Deloitte's retail sector leader in the United States, adding that Deloitte forecasts a 15 percent increase in non-store sales. Nearly two-thirds of non-store sales are from the online channel, with the remainder coming from catalogs and interactive TV.

Paul continued, "The convenience and functionality that have fueled e-commerce gains in previous seasons will continue to draw consumers online to do their shopping this year. Online activity may also influence in-store shopping this holiday season, as social networks and mobile applications are playing a more prominent role in the shopping process. As such, retailers should seek to deliver tightly-integrated and consistent merchandise, inventory and promotional messages to customers moving between web-based and physical storefronts."

Paul added that retailers appear to have started to moderately rebuild inventories after deep reductions last year, and that they will need to sharpen their game to move merchandise this season to capitalize on sales gains without dampening profit margins.

"Retailers should be out in front of consumers to get their attention and strike a connection with their brand early and often," said Paul. "By reaching out to consumers via mobile applications, digital marketing and social networks, retailers today may be able to enhance brand awareness and build traffic and sales this holiday season."

For more information about Deloitte's retail practice, please visit www.deloitte.com/us/retail.

As used in this document, "Deloitte" means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.

(i) Deloitte is forecasting a 2 percent increase in 2010 holiday sales compared with 2009. Retail sales between November 2009 and January 2010 (not seasonally adjusted and excluding automotive and gasoline) totaled $834 billion according to the U.S. Commerce Department.

SOURCE Deloitte