Retail sales growth for the fourth quarter holiday period will be half of what it was in 2010, Kantar Retail forecasts. The outlook for the 2011 holiday season is not a matter of whether it will be weak, but rather how weak it will be in the wake of declining consumer and business confidence.
Holiday Retail Sales Results* (Fourth Quarter Year-over-Year Growth)
2000 |
2001 |
2002 |
2003 |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010 |
2011(FC) |
3.7% |
3.2% |
2.6% |
5.7% |
5.9% |
6.3% |
4.0% |
3.1% |
-2.8% |
-0.1% |
5.6% |
2.8% |
*For retail sales excluding the auto and fuel channels; Includes the food and drug channels
Sources: U.S. Department of Commerce and Kantar Retail
“While the outlook isn’t negative for all retail sectors, it will be driven by the degree to which declining confidence affects spending decisions, particularly for businesses,” Badillo adds. In the face of rising uncertainty, Kantar Retail expects firms will hold back on investment and hiring, which will aggravate job and income prospects of households, who in turn will hold back on spending. “The probability is high that this will lead to another recession unless some positive shock-such as government stimulus-keeps the period of heightened uncertainty short and quickly starts to lift consumer and business confidence,” he adds.
The weak outlook and uncertain climate will weigh heavily on holiday spending intentions, according to Kantar Retail’s ShopperScape® survey. “We expect shoppers' spending intentions to continue to weaken in the months ahead but not necessarily fall off suddenly and dramatically,” notes Badillo. Despite the weakening spending intention trends, shoppers' outlook for the holiday remains better than it was coming out of the recession in 2009, based on an early read of holiday gift spending plans. More shoppers plan to spend more vs. last year, fewer plan to spend less, with half of all shoppers planning to spend about the same as last year.
Amount Planning to Spend on Holiday Gifts Compared with Last Year
|
Aug-09 |
Aug-11 |
Sample Size |
4273 |
4004 |
|
|
|
Much/somewhat more |
7% |
9% |
About the same amount |
45% |
50% |
Much/somewhat less |
43% |
35% |
Do not spend on holiday gifts |
5% |
6% |
|
|