Santa: Riding With The Bulls

by Sarah Mahoney, Oct 2, 2012, 2:39 PM

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In its most optimistic forecast since the economy tanked back in 2008, the National Retail Federation says it expects holiday sales to climb 4.1% to $586.1 billion this year. And while that prediction is still somewhat below what consumers actually spent last year (that was a 5.6% jump), it is still well above the trade group’s 10-year average holiday sales increase of 3.5%. 

The NRF forecast is even more bullish than the 3.5 to 4% gain forecast by Deloitte last week. The organization says the big bump comes as a result of both the strengthening economy and consumers’ resilience to bad news. “This year has been a roller-coaster for retail industry sales on a month to month basis,” NRF president and CEO Matthew Shay says in a webcast about the forecast. “And it’s clear that this is some general anxiety among consumers, including the political uncertainty and concerns about the looming 'fiscal cliff,’ as well as the employment picture.” 

But there’s also plenty of evidence that shoppers have no intention of letting such dreary prospects suck the fun out of their sparkle season. Calling the outlook “a vast improvement” from past years, BIGinsight consumer insights director Pam Goodfellow says the NRF’s research finds that while consumers will be careful, they’ll also be creative.

“They are focused on controlling spending and paying down debt,” she says, also in the NRF webcast, “but they will also be using coupons, social media sites, reading their direct mail, checking out emails, and reading circulars. While they aren’t ready to start using the word 'recovery’ in their vocabulary, consumers will work all the angles to make their budgets work.” 

Additionally, she says that more shoppers will use credit cards, “but to their benefit, not detriment,” looking for spending perks, points and special promotions offered by credit-card companies. “In fact, we’ve seen an increase in shoppers carrying zero balances on their cards,” she says. “This won’t be a Christmas on credit.”

The NRF also released a forecast for Shop.org, its online division, calling for a 12% gain in e-commerce compared to last year, with spending potentially reaching $96 billion. (Last year, e-commerce sales gained 15%.) So far, though, there is less of a consensus about what consumers may or may not buy on line. Citigroup is predicting a gain of 20%, while Deloitte’s research points to a gain of between 15 and 17%. And BDO, which bases its numbers on interviews with the CFOs of the nation’s biggest retailers, is predicting a gain of just 4.6% in holiday online sales.

 

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