Consumers Continue to Embrace Thrift while Retailers Brace for a Chilly Season
NEW YORK, Sept. 21 /PRNewswire/ -- With consumers still reeling from the toughest economic pressures in decades, retailers should expect sales to remain flat compared with the 2008 holiday shopping season, Deloitte forecast today.
"Although there are signs that suggest the economy is nearing the end of its darkest days, many consumers remain burdened by restricted credit availability, high unemployment and foreclosures," said Carl Steidtmann, chief economist with Deloitte Research, a subsidiary of Deloitte Services LP. "Americans continue to save at historically high rates while also paying down debt, and these factors combined suggest another chilly holiday season for retailers."
Deloitte's Retail group expects total holiday sales to reach $810 billion,(1) which would represent a zero percent change in November - January holiday sales, excluding motor vehicles and gasoline, over last year. This would be an improvement over last season's 2.4 percent decrease, the first decline in holiday sales according to Deloitte's analysis of Commerce Department data dating back to 1967.
"We are seeing certain economic indicators move in the right direction," said Steidtmann. "The consumer's desire to spend may rally somewhat if gas prices remain stable, home values continue to strengthen and the stock market's comeback persists," Steidtmann added. "These small improvements are part of the reason that retailers may avoid another negative season."
"While the level of economic uncertainty may be lower than a year ago, consumers will likely proceed cautiously into the holiday season," said Stacy Janiak, vice chairman and U.S. Retail leader, Deloitte LLP. "Retailers appear to have prepared themselves for a challenging season by adjusting inventory and closely managing their expenses. Going forward, scenario planning that accounts for different market conditions may help merchants navigate these uncertain times. Retailers should also consider placing customer insights at the forefront of their decisions around merchandising, pricing and promotions."
Janiak added, "A growing opportunity for retailers is the surge in consumers who are embracing the digital age. Retailers that can harness the power of technology likely have a better chance of engaging those consumers who are willing to spend. The proliferation of mobile applications and social networks may yield new opportunities to pursue targeted advertising, build brand loyalty and measure campaign effectiveness."
As used in this document, "Deloitte" means Deloitte LLP and Deloitte Services LP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.
(1) Deloitte is forecasting a zero percent increase in 2009 holiday sales compared with 2008. Retail sales between November 2008 and January 2009 (not seasonally adjusted and excluding automotive and gasoline) totaled $809 billion according to the U.S. Commerce Department.
