By Steve Rowen, Partner
10/2/2007
The NRF recently released predictions of retail sales numbers for a near-term holiday that are highly optimistic. And while it is indeed very good news that polling shows spending this Halloween is expected to be up from last year (the average person plans to spend nearly $65 compared to last year’s $59), predictions for the “real” holiday season are not so encouraging.
To date, retail-specific polls and estimates across the board are calling for a flat holiday season: 2007’s gross retail sales will remain on par with those from 2006.
What is disconcerting about this prediction is that online shopping for this year’s December holidays is projected to be up – way up – in many cases, to the tune of double-digit increases over last year’s online spend. In fact,Forrester Research is calling for a 23% online shopping boon in 2007 holiday sales.
What then, if online sales are to blossom to expectations, does an overarching prediction of “flat” say for in-store sales this November and December?
For starters, it says that rising fuel costs may finally have a significantly negative impact on landed retailers. With an economy currently dancing with the “r” word, consumers may have finally hit the wall fighting crowds and traffic for both purchases and returns at a national average of $2.80 a gallon (Detroit Free Press).
It also suggest that shoppers’ experiences in recent past years with retail stores may have been more than temporarily damaging. While out-of-stock, pricing, and promotional flubs have always been bad business, retailers’ errs during the 2005 and 2006 holiday seasons may not have only sent the customer across the street, but actually forced the customer off the street altogether.
And while personal computer and high-speed internet prices continue to fall, it is our contention that the customer has already had the ability to eliminate the in-store holiday shopping experience for quite some time. The real reasons that shoppers are voluntarily taking themselves out of the store extend well beyond “I don’t have to visits stores anymore.”
We’d be very interested to hear your thoughts on this year’s fast-approaching holiday retail season. Because Halloween sales may be on a positive projection, but Halloween, after all, is a holiday based on escaping reality.
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