Retail CMOs Expect Modest Rise in 2011 Holiday Sales

Increasing consumer uncertainty translates to retailer uncertainty—especially when it comes to sales. A shaky economy, high unemployment, and stagnant household income levels are changing the way consumers approach their gift lists. Shoppers are stretching their budgets and looking for deals whenever possible, leaving industry experts unsure of what to expect this holiday season. Nonetheless, our latest survey of chief marketing officers finds that retailers expect a modest increase of 2.9% in total 2011 holiday sales.

BDO’s recently released Retail Compass Survey of CMOs measures the expectations of 100 retail CMOs on everything from sales and inventory to holiday promotions and marketing budgets. Retailers may not be expecting a record-breaking holiday season, but they won’t be getting a lump of coal either. Overall, 41% of CMOs expect an increase in total holiday sales. Not surprisingly, this is down from the 2010 prediction of 52%. But CMOs at the top 100 largest retailers (12% of those surveyed) are more optimistic, with 67% expecting an increase in holiday sales. Same-store sales (revenues of retail stores open for a year or more) reflect the same modest predictions. Over half (54%) of retail CMOs expect that holiday same store sales will be flat, and just 37% predict an increase. Overall, CMOs surveyed expect a 2% increase in same-store sales.

What’s behind this cautious outlook? More than half (52%) of  CMOs believe unemployment to be the greatest risk to holiday sales, 19% are most concerned about the weak housing market, and 17% say energy and fuel costs will make-or-break holiday sales results.

Despite these worries, retailers are confident that the products on their shelves match shopper preferences. Topping holiday wish lists are gadgets like tablets, smartphones and tablets, which 58% of CMOs predict to be the strongest performers this season.  CMOs at the top 100 retailers are particularly optimistic about consumer electronics, with 83% expecting the category to bring in the most holiday sales. Other CMOs (16%) expect the toy category to perform well this season, followed by apparel (11%), home goods (10%), and lifestyle goods (5%).

Consumer confidence may be at recession levels, but retailers are fighting back. Buoyed by smarter inventory choices and aggressive promotions, retailers aren’t ready to give in to pessimistic industry chatter.

What are your expectations for the holiday season?

Blog-subscribe-ad_CB.JPG