Deloitte Forecasts Modest Increase in Holiday Sales

Double-digit non-store sales growth expected

Wow! It's not even Halloween yet and we're already talking about Christmas shopping. Since that seems to be the way of the world now, a major business consulting firm is out with its shopping prognostication. 

Deloitte's retail & distribution practice expects total holiday sales to climb to between $920 and $925 billion, representing a 3.5 to 4 percent increase in November through January holiday sales (excluding motor vehicles and gasoline) over last season. Last year's growth rate was 5.9 percent. 

Additionally, Deloitte forecasts a 15 to 17 percent increase in non-store sales. Nearly three-quarters of non-store sales result from the online channel with additional sales coming from catalogs and interactive TV. 

"Economic headwinds nagging consumers this fall include stubbornly high gasoline prices that continue to creep up and soft housing and job markets," said Carl Steidtmann, chief economist at Deloitte. "While consumers turned out in the summer to give retailers solid gains for a few months, that pace may be difficult to sustain through the end of the year. Consumers and businesses alike may pause in advance of the election; however, retailers may benefit from a post-election consumer spending boost." 

Bargain hunters 

Alison Paul, vice chairman, Deloitte LLP and retail & distribution sector leader, noted that consumers might consolidate or reduce trips to the store in response to higher gas prices. Conversely, she added, consumers are expected to keep a sharp eye on promotions and pricing, making retailers' digital connections with consumers before and during each shopping trip even more critical this year. 

"Non-store sales continue to outpace overall growth, but increasingly influence consumers' experience with the retail store, from trip planning, to in-store product research, and post-purchase reviews and sharing," said Paul. "This holiday season, retailers' most lucrative customers may be the ones they engage across physical and virtual storefronts." 

Paul anticipates retailers will come to the starting gate with true omni-channel pricing strategies, as opposed to disparate or reactionary strategies of the past. "Consumers should see more price transparency across mobile, online and store channels, and retailers will use these same channels to gain insights into their core customers' behavior,” she said. “Retailers that interpret and respond to real-time information about shoppers can hit the right notes on pricing and promotions that drive traffic without eroding margins." 

Smartphone shoppers 

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

"Retailers that welcome the smartphone shopper in their stores with mobile applications and WI-fi access -- rather than fear the showrooming effect -- can be better positioned to accelerate their in-store sales this holiday season," said Paul. Recent research from Deloitte indicates that shoppers armed with smartphones are 14 percent more likely to make a purchase in the store than those who do not use a smartphone as part of their in-store journey. "The mobile channel is a powerful customer engagement tool, enabling retailers to capture a shopper's attention at the point-of-purchase, while gleaning valuable information about shopper behavior regardless of the shopper's location."

Story provided by ConsumerAffairs.
Consumer Affairs

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