Retailers are Most Optimistic for Holiday Sales Since 2007

On Tuesday, millions of Americans will head to the polls. While (as I write) the outcome of the election is uncertain, the retail industry is confident headed into the holiday season. Our new Retail Compass Survey of CMOs, which polls 100 retail chief marketing executives on their plans and expectations for the holidays, found that they expect a 3.7 percent increase in comparable store sales – the most bullish projection since 2007. CMOs are even more optimistic for total holiday sales, forecasting a 4.7 percent increase.
Holiday Season Comparable Store Sales Forecasts
2012 2011 2010 2009 2008 2007
+3.7% +2.1% +2.8% +1.6% -2.7% +5.0%

What’s behind the holiday cheer? After all, there are still challenges in the economy — most notably, unemployment — that have been impacting consumer confidence and spending this year. One factor is that retailers know consumers are not as affected by uncertainty around the election or the fiscal cliff as businesses are. Consumers will still spend. Retailers are also better prepared for the holidays than ever. After learning some hard lessons over inventory surpluses in 2009 and 2010, retailers are laser-focused on the right balance. A majority of CMOs say their inventory levels will be consistent with last year, but consumers may see a slight uptick in the variety of items on the shelves this year, with CMOs expecting a 1.2 percent increase in SKUs.

An increased focus on the right products is also bolstering confidence. Retailers are curating more exclusive lines and brands and stocking popular products. Tablets are expected to be among the most popular gift items this season following the flurry of new tablet announcements from tech giants including Apple, Microsoft and Google. In fact, a majority of CMOs (62 percent) say consumer electronics will be the strongest selling category in 2012. The continued confidence in consumer electronics sales is likely fueled by similar expectations from 62 percent of CMOs that the category will see the most discounts and promotions during the holiday season.

Price-matching programs at Target, Best Buy and PayPal suggest that retailers will be battling with both online and brick-and-mortar retailers for these purchases. And we expect that battle to be a long one — promotions have already begun or have been leaked at several retailers.

Stay tuned for more insights from the 7th edition of our Compass Survey of CMOs — including insights on Black Friday and Cyber Monday sales, and how CMOs are allocating their marketing budgets.