EXCLUSIVE RESEARCH
Nov 1, 1997 12:00 PM, Teresa DeFranks, Editor/Associate Publisher
Retailers Predict 7.1% Holiday Sales Surge Our third annual forecast also reveals a decreasing reliance on markdowns as a means to stimulate sales and profits.
Retailers are entering the all-important holiday selling season optimistic about the potential sales gains. According to Shopping Center World's Third Annual Holiday Sales Forecast, nearly 75 percent of the 144 retail chain chief executive officers and/or presidents surveyed are anticipating an increase in sales as compared to 1996. Similarly, nearly 65 percent are expecting a surge in profits.
Overall, retailers say comparable store sales will jump 7.1 percent for the 1997 holiday selling season. Profits, they predict, will jump 5.5 percent.
Although the percentage increase in sales is slightly less than what our 1995 and 1996 forecasts revealed, the good news is that more retailers are predicting an increase of any kind. The "optimists" have grown from 59 percent in 1995 to nearly 75 percent this year.
The way to a sales/profits increase, retailers say, is paved with a continuing emphasis on controlled corporate expenditures, a tight but diverse inventory and a decreasing reliance on markdowns. The majority of respondents (55.6 percent) indicate that they will tighten corporate expenses in order to stimulate sales and profits this year.
The percentage of respondents who plan on using markdowns decreases this year to 17.4 percent from 23.4 percent in the 1995 forecast and 21.1 percent in 1996. With fewer markdowns, a 7.1 percent sales growth may well be in reach.
In analyzing the responses from apparel retailers only (which comprised 30 percent of the respondents), "tightening corporate expenses" is the No. 1 goal. However, the apparel retailers give more weight to presenting a more diverse inventory than the overall surveyed group, which assigned equal emphasis to tightening inventory as diversifying it.
A "strong" or "improved" economy is the external factor at work in sparking a sales gain, retailers say. Select responses include: * "The economy is much stronger, with a more powerful attitude toward spending." * "This whole year, our customers seem more confident, more willing to buy top quality [goods]." * "People have more money."
The naysayers cite "overloaded" credit cards, difficulty in finding sales associates and a "growing confidence" in mail-order catalogs as factors that will cause flat or decreasing comp-store sales.
The general mood is upbeat, and it appears that prosperity will be shared across retail categories. Whether it is computers or pet supplies, apparel or linens, nearly all respondents (98.6 percent) indicate that at least one retail category will show a growth in sales during the 1997 holiday selling season.
Computer hardware/software comes out on top as the retail category respondents say will experience the greatest sales leap this holiday season. The apparel category, which had little support in our first forecast in 1995, holds on to the second place spot as it did in our 1996 forecast.
With apparel retailers back in the game and more retailers in general looking for positive sales gains, the 1997 holiday selling season is poised to reach or possibly exceed this forecast's predictions.
About the survey The 1997 Holiday Sales Forecast questionnaire was designed by the editors of Shopping Center World and Intertec Marketing Research, Atlanta. On Aug. 15, 1997, it was mailed to 1,000 SCW readers who are chief executive officers or presidents of department, discount and specialty retail chains/stores. On Aug. 29, a follow-up mailing was sent to members of the sample who had not responded. The survey was closed for tabulation on Sept. 23, with 144 usable responses. The margin for error is +/- 8 percent at the 95 percent confidence level.
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