Thursday, October 4, 2012

Holiday sales forecast is good news for retailers

CNBC's Courtney Reagan reports Americans are expected to spend more this holiday season, although economic uncertainties persist.

By Roland Jones, NBC News

The best that can be said about the 2012 holiday shopping season is that it will be about average, according to the latest forecast from the National Retail Federation (NRF), a retail trade group.

The NRF predicts that holiday sales this year will increase 4.1 percent to $586.1 billion -- that?s just above the 10-year average of 3.5 percent growth for annual holiday sales increases, but down from the 5.6 percent growth figure for holiday sales in 2011.

Consulting firm Deloitte has a similarly tempered outlook for 2012 holiday sales. It recently issued a forecast for retail sales for the November through January period to rise between 3.5 percent and 4 percent this year, down from a gain of 5.9 percent in 2011. Deloitte blamed the downturn on high gas prices and weak housing and job markets.

The factors restraining holiday sales this year also include an upcoming presidential election, gridlock in Washington surrounding the expiration of tax cuts and spending cuts, also called ?the fiscal cliff,? and concern relating to future economic growth. These variables are likely to combine to impact consumers and their spending, according to the NRF?s President and CEO Matthew Shay.

The group?s holiday shopping forecast is ?neither negative nor extremely robust,? he added. ?But at this point we?re optimistic that we?ll see solid holiday sales growth this year.?

Major retailers appear to be gearing up for a strong holiday season.

Wal-Mart, Toys R Us, Macy?s and others have been making bets that they?ll need extra staff for the holiday shopping season, taking on extra staff to help them deal with the upcoming holiday season.

On Monday Macy?s said it plans to hire about 80,000 seasonal workers, a 2.5 percent increase from last year, in order to staff up its Macy's and Bloomingdale's stores, and also to add staff to its call centers, distribution centers and online fulfillment centers.

Holiday shopping season sales are vital to retailers because they account for around a quarter of annual retail sales in a typical year.

While 57 percent of retailers plan to hire seasonal workers at the same level as 2011, 36 percent say they will be hiring more workers this year -- up from 10 percent in 2011, according to a survey by Hay Group. The management consultancy polled 14 major U.S. retailers in order to gauge retailers? plans for the 2012 holiday season.

Retailers? holiday sales projections and hiring plans show they are more confident in economy, Hay Group said. Seventy-five percent of retailers expect an increase in holiday sales this year, according the survey.

Holiday shoppers are expected to continue to move online to do their purchases, according to the NRF?s new data.

The group predicts online holiday sales will grow 12 percent over last year?s figure. Total online spending this holiday season is estimated to be between $92 billion and $96 billion. The Commerce Department estimated that e-commerce in the last quarter of 2011 increased 15 percent from the year before.

?Online retail has been a bright spot for years and we don?t expect that trend to change anytime soon, especially with the growth in mobile,? noted the NRF?s Shay.

Although online sales only represent about 5 percent of all retail sales, it is a rapidly growing channel for holiday shopping.

A retailer who will benefit the most from this trend will be Amazon.com, which is expected to become the most shopped retailer for the 2012 holiday season, surpassing the current leader Wal-Mart, according to retail consultancy Kantar Retail.

Deloitte forecasts a 15 to 17 percent increase in non-store sales this year. About 75 percent of those sales will come from the online channel with additional sales coming from catalogs and interactive television.

Interestingly, rather than hurting in-store sales, Deloitte anticipates that mobile-influenced retail store sales will account for 5.1 percent, or $36 billion, in retail store sales during the holiday season, driven by consumers? store-related smartphone activity such as product research, price comparison or mobile application use. ??

Deloitte research suggests that shoppers armed with smartphones are 14 percent more likely to make a purchase in a store than those who do not use a smartphone as part of their in-store shopping.

This suggests the ?show-rooming? effect -- where shoppers browse merchandise in stores, and then go home to purchase the product online for less money -- is not as big a problem as had been feared.

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Source: http://marketday.nbcnews.com/_news/2012/10/02/14171943-holiday-sales-forecast-is-good-news-for-retailers?lite

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