Flat Holiday Expected in 2009

Retailers should expect sales to remain flat compared with the 2008 holiday shopping season, according to a study by Deloitte Research. “Although there are signs that suggest the economy is nearing the end of its darkest days, many consumers remain burdened by restricted credit availability, high unemployment and foreclosures,” says Carl Steidtmann, chief economist with Deloitte Research, a subsidiary of Deloitte Services LP. “Americans continue to save at historically high rates while also paying down debt, and these factors combined suggest another chilly holiday season for retailers.”

Deloitte is forecasting a zero percent increase in 2009 holiday sales compared with 2008. Retail sales between November 2008 and January 2009 (not seasonally adjusted and excluding automotive and gasoline) totaled $809 billion according to the U.S. Commerce Department. However, a zero percent change would represent an improvement over last season's 2.4 percent decrease, the first decline in holiday sales according to Deloitte's analysis of Commerce Department data dating back to 1967.

Steidtmann says consumers’ desire to spend may rally if gas prices remain stable, home values continue to strengthen and the stock market's comeback persists.

“While the level of economic uncertainty may be lower than a year ago, consumers will likely proceed cautiously into the holiday season,” adds Stacy Janiak, vice chairman and U.S. retail leader, Deloitte LLP. “Retailers appear to have prepared themselves for a challenging season by adjusting inventory and closely managing their expenses.”

She sees another growing opportunity for retailers in the surge in consumers who are embracing the digital age. “Retailers that can harness the power of technology likely have a better chance of engaging those consumers who are willing to spend,” she says. “The proliferation of mobile applications and social networks may yield new opportunities to pursue targeted advertising, build brand loyalty and measure campaign effectiveness.”