U.S. retail sales will grow 6.5 % in 2005, compared with an 8.7% increase last year, according to the annual industry forecast from The Ernst & Young Consumer Trends Center. The forecast also anticipates that many consumer products categories will be deflationary due to competitive pressures and increasing commodity prices. As a result, M&A activity in this sector is a strong possibility. The forecast anticipates that the level of activity will be akin to the merger boom of 2000 but with larger combinations.
Underlying these forecasts are the dramatic changes taking place among American shoppers, which are outlined in a separate, new report from The Ernst & Young Consumer Trends Center. According to its 2005 Consumer Trends Report, Americans are living longer, culturally and ethnically more diverse, packing on more pounds, and alternately pressed for time and bored. These factors, and many others, are culminating in trends that influence how and where Americans shop, eat and relax.
“There are countless trends at play in American society,” says Jay McIntosh, Americas Director of Retail and Consumer Products for Ernst & Young LLP. “In this report, weve identified the trends that we believe will have the greatest impact on retail and consumer products companies. Some of these trends portray dramatic shifts in society and spending patterns, some represent a change in the consumer perspective, and others signal how consumers are responding to the digital world and other pressures.”
