Deloitte said a slow economy would keep shoppers cautious about purchasing and hold consumer spending in the United States to a 2% increase in the 2010 year-end holidays. However, retailers should make some gains despite the economic doldrums, particularly outside the traditional store environment.
“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 of Deloitte’s U.S. retail sector.
Deloitte expects a 15% increase in non-store sales, with two-thirds of the total there emerging from the online channel. The rest will come from catalogs and interactive TV.
“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,” Paul noted. The Internet also should have more influence on in-store spending this holiday season, as consumers continue making price comparisons on the web and participate more enthusiastically in commercial initiatives that incorporate social network and mobile devices.
Paul said market indicators suggest that retailers are rebuilding inventories modestly after deep reductions last year but that they must operate with a tight focus on opportunities to move products profitably. “Retailers should be out in front of consumers to get their attention and strike a connection with their brand early and often,” Paul asserted. “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.”
The modest holiday sales increase Deloitte has forecasted does represent at least some improvement over last year’s 1% gain. Deloitte’s retail group expects total sales, excluding motor vehicles and gasoline, to reach $852 billion in the November through January holiday sales season.
Still, continuing weakness in housing and employment is likely to restrict consumer cash flow, said Carl Steidtmann, Deloitte’s chief economist. Additionally, household focus on reducing debt, tight credit and the end of government stimulus programs will limit the holiday cash consumers have available.
“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,” Steidtmann said. “However, given the unsteady pace of economic recovery, retailers should expect only a small uptick in holiday sales this year.”