Retail CMOs Signal Strong Holiday Sales

According to our fifth-annual BDO USA, LLP Retail Compass Survey of CMOs, retailers expect recent positive momentum to continue and forecast a comparably strong holiday season.

The survey, which examined the opinions of 100 chief marketing officers at leading retailers located throughout the country, found that CMOs expect comparable and overall sales to increase by 2.83 percent and 3.51 percent respectively, for the 2010 holiday season. This is a big jump in expectations from last year (comparable: 1.4% and overall: 2.6%) and would be a marked improvement from both the 0.4 percent uptick in actual holiday sales and the dismal 3.9 percent decline retailers experienced in 2008 (reported by the NRF).

Consumer Spending Remains a Threat

Notwithstanding this increase, the post-recession resurgence does not appear to be as strong as that of previous economic downturns in the retail market.  Following the 1982 recession, consumer spending rose between 4% and 8% whereas third quarter spending only rose 2.6% this year.  Consequently, more than half (53%) of CMOs say stagnant consumer spending and low confidence levels will have the greatest impact on 2010 holiday sales. While still a concern, unemployment (22%) carries less weight on holiday sales this year, a notable decrease from 2009 (67%).

Gift Cards Sales Expected to Rise

With retailers like Costco and Amazon offering more gift card options, including varied price ranges and flexible spending, gift cards are expected to be top performers this holiday season.  In fact, nearly half (47%) of retail CMOs expect an increase in gift card sales and another 40% expect them to stay the same, leaving only 13% of CMOs predicting a decline in gift card sales.

What factors are playing into your holiday sales expectations?  Are they in line with the survey respondents?