09.22.11
Forget the "Ho, ho, ho" this holiday season. It's more like "ho-hum." With consumer confidence sliding and unemployment levels unwavering, holiday sales will grow just 2.8% this year, down from 5.6% in 2010, according to a new study by Kantar Retail. Moreover, volume growth is forecast to be flat for the holiday and is at significant risk of turning negative by year-end or the start of 2012.
"If unit volume or inflation-adjusted growth turns negative for retail sales, it would likely coincide with a recession in the overall economy," comments Frank Badillo, senior economist for Kantar Retail.
Back in 2007, before the last recession, holiday sales rose 3.1%. But in 2008 and 2009, sales declined 2.8% and .1%, respectively.
"While the outlook isn’t negative for all retail sectors, it will be driven by the degree to which declining confidence affects spending decisions, particularly for businesses," Badillo added.In the face of rising uncertainty, Kantar Retail expects firms will hold back on investment and hiring, which will aggravate job and income prospects of households, who in turn will hold back on spending. "The probability is high that this will lead to another recession unless some positive shock, such as government stimulus, keeps the period of heightened uncertainty short and quickly starts to lift consumer and business confidence," he explained.
The weak outlook and uncertain climate will weigh heavily on holiday spending intentions, according to Kantar Retail’s ShopperScape survey.
"We expect shoppers' spending intentions to continue to weaken in the months ahead but not necessarily fall off suddenly and dramatically," noted Badillo.
Despite the weakening spending intention trends, shoppers' outlook for the holiday remains better than it was coming out of the recession in 2009, based on an early read of holiday gift spending plans.More shoppers plan to spend more vs. last year, fewer plan to spend less, with half of all shoppers planning to spend about the same as last year.
What are folks going to buy? Led by online sales, non-store retailers will continue to outpace overall retail sales growth, according to Kantar.The forecast for non-store retailing, which also includes catalog and electronic home shopping retailers, will moderate to 9.0% growth this holiday period.Online retail sales are forecast to grow 13.5% as shoppers—particularly upper-income shoppers—continue to shift more of their purchasing online and elevated fuel prices encourage shoppers to minimize store trips.Non-store retailers could continue to sustain double-digit growth if demand for smartphones, tablet computers, and e-book readers proves resilient to softening household demand in other categories.
As households curb spending in discretionary categories, the homegoods and softgoods retail channels will be the focus of the holiday growth slowdown.Combined nominal growth for these channels is forecast to be flat.And, inflation-adjusted growth is forecast to be negative in several channels including apparel, home improvement, and furniture/home furnishings stores.
Online retail sales are forecast to cool from "very hot" to "hot" in the holiday fourth quarter, according to Kantar Retail forecasts of the government-reported data. Sales are forecast to grow 13.5% during the holiday, which is not as torrid as the 16.5% growth of a year ago. The forecast calls for sales to total $60.4 billion during the last three months of the year, up from $53.2 billion last year.
"If unit volume or inflation-adjusted growth turns negative for retail sales, it would likely coincide with a recession in the overall economy," comments Frank Badillo, senior economist for Kantar Retail.
Back in 2007, before the last recession, holiday sales rose 3.1%. But in 2008 and 2009, sales declined 2.8% and .1%, respectively.
"While the outlook isn’t negative for all retail sectors, it will be driven by the degree to which declining confidence affects spending decisions, particularly for businesses," Badillo added.In the face of rising uncertainty, Kantar Retail expects firms will hold back on investment and hiring, which will aggravate job and income prospects of households, who in turn will hold back on spending. "The probability is high that this will lead to another recession unless some positive shock, such as government stimulus, keeps the period of heightened uncertainty short and quickly starts to lift consumer and business confidence," he explained.
The weak outlook and uncertain climate will weigh heavily on holiday spending intentions, according to Kantar Retail’s ShopperScape survey.
"We expect shoppers' spending intentions to continue to weaken in the months ahead but not necessarily fall off suddenly and dramatically," noted Badillo.
Despite the weakening spending intention trends, shoppers' outlook for the holiday remains better than it was coming out of the recession in 2009, based on an early read of holiday gift spending plans.More shoppers plan to spend more vs. last year, fewer plan to spend less, with half of all shoppers planning to spend about the same as last year.
What are folks going to buy? Led by online sales, non-store retailers will continue to outpace overall retail sales growth, according to Kantar.The forecast for non-store retailing, which also includes catalog and electronic home shopping retailers, will moderate to 9.0% growth this holiday period.Online retail sales are forecast to grow 13.5% as shoppers—particularly upper-income shoppers—continue to shift more of their purchasing online and elevated fuel prices encourage shoppers to minimize store trips.Non-store retailers could continue to sustain double-digit growth if demand for smartphones, tablet computers, and e-book readers proves resilient to softening household demand in other categories.
As households curb spending in discretionary categories, the homegoods and softgoods retail channels will be the focus of the holiday growth slowdown.Combined nominal growth for these channels is forecast to be flat.And, inflation-adjusted growth is forecast to be negative in several channels including apparel, home improvement, and furniture/home furnishings stores.
Online retail sales are forecast to cool from "very hot" to "hot" in the holiday fourth quarter, according to Kantar Retail forecasts of the government-reported data. Sales are forecast to grow 13.5% during the holiday, which is not as torrid as the 16.5% growth of a year ago. The forecast calls for sales to total $60.4 billion during the last three months of the year, up from $53.2 billion last year.