Retailers are Realistic, Rather Than Optimistic for 2013 Holidays

For the eighth year in a row, we surveyed 100 retail chief marketing officers to gauge their expectations for the holiday season. This year, it’s clear that retailers will face some headwinds as they look to attract shoppers to their stores and sites. Consumers seem to be a bit sluggish in response to slow economic growth, Federal budget concerns and the shutdown, and confidence levels have been shaky at best.

As a result, retail CMOs are avoiding over-enthusiasm and approaching the season with realistic sales expectations. This year, CMOs project a 2.5 percent increase in comparable store sales, down from 3.7 percent last year. The forecast is in line with what we heard in our recent poll on the blog where 63 percent of readers said they thought CMOs would have “tempered” projections.
Holiday Season Comparable Store Sales Forecasts
2013 2012 2011 2010 2009 2008 2007
+2.5% +3.7% +2.1% +2.8% +1.6% -2.7% +5.0%

Retailers also have slightly lower expectations for total sales. Overall, CMOs forecast a 3.8 percent increase in total holiday sales, down from an expected 4.7 percent increase in 2012, which proved overly optimistic. According to the NRF, 2012 holiday sales increased 3.8 percent, and the Federation expects a similar 3.9 percent increase this year. Still, only six percent of CMOs forecast a sales decrease.

While sales may not be spectacular, we expect retailers will look to heavy promotions to meet their numbers and move products off the shelves. Halloween seasonal items have been replaced with holiday decorations, and Wal-Mart and Amazon have already started online Black Friday-like promotions.

CMOs hope this will help consumers warm up to spending, but there are still some significant challenges to a successful holiday season. When asked which issue presents the biggest risk to holiday sales, a plurality of retailers (47 percent) point to unemployment. It’s no surprise that the high rates of long-term unemployment and underemployment continue to challenge consumers and concern retailers, but a number of other issues could also stymie spending. Retailers also note the housing market (16%), energy & fuel costs (13%) and tax changes (6%) as top threats to holiday sales.

Stay tuned for more insights from our 2013 Retail Compass Survey of CMOs, including top product categories, inventory levels and Thanksgiving weekend sales projections.