BDO USA, LLP latest survey of chief marketing officers (CMOs) at leading U.S. retailers found they expect comparable and overall sales to increase by 2.83% and 3.51% respectively, for the 2010 holiday season.

This is a big jump in expectations from last year (comparable: 1.4% and overall: 2.6%) and would be a marked improvement from both the 0.4%uptick in actual holiday sales and the dismal 3.9% decline retailers experienced in 2008 (reported by the NRF).

Improved holiday inventory forecasts indicate a recovering consumer industry. Already, CMOs say they increased their inventory purchases by 2.8%. More than one third (33%) of CMOs say their inventory purchases have measurably increased since last year and only 16% of retailers are citing a decrease. Stable inventory levels have been largely reported, with 52% of CMOs saying their volume has stayed about the same.

“Retailers appear more optimistic for the 2010 holiday season, a sign of the industry’s resilience,” said Doug Hart, partner, Retail & Consumer Product Practice of BDO USA. “Retailers expect the recent positive momentum to continue now that consumer spending is gradually improving. While retailers continue to carefully manage inventory levels, some are planning to broaden product offerings for the 2010 holidays, a major change from 2009.”

These findings are from the most recent edition of the BDO USA Retail Compass Survey of CMOs, which examined the opinions of 100 chief marketing officers at leading retailers located throughout the country. The retailers in the study were among the largest in the country, with revenues ranging from $100 million to $100 billion. The survey was conducted in October of 2010.

Some of the major findings of the BDO USA Retail Compass Survey of CMOs include:

  • Retailers Have Broadened Product Offerings. Shoppers could expect to see a little more variety in stores this year; though likely from a select number of brands as strict inventory management remains critical. When it comes to SKUs for the upcoming holidays, CMOs say they have increased by .88%. More than one-third (31%) of CMOs say they are increasing their SKUs while 45% percent are making no change. Only 16% of retailers are decreasing their SKUS for the 2010 holiday season.
  • Total 2010 Holiday Sales Projected to Increase. More than half (52%) of CMOs expect their overall sales for the 2010 holiday season to increase compared to last year and many (36%) expect sales to remain steady. Only 13% of CMOs expect 2010 holiday sales to decrease. This shows growing optimism for the sector since 2008, when 40% expected a decrease, accurately predicting a 2.8 percent decline. In 2009, actual holiday sales rose 1.1%.
  • Retailers Forecast an Increase in Comparable Store Sales. Projecting a 2.83% increase in same-store sales, retailers are strengthening their outlook from 2009 when they forecasted only a 1.4% increase. Almost half (48%) of CMOs say same-store sales will increase while 43% of CMOs say sales will be flat when compared to 2009. Only 8% of CMOs expect flat same-store sales this year, an increase from last year (10%) and drastic reduction from 2008 (39%).
  • Consumer Spending Greatest Threat to Holiday Sales. Though consumer spending rose by 2.6% in the third quarter, it remains well below levels seen following previous U.S. recessions. In the four quarters following the 1982 recession, consumer spending posted increases of between 4% and 8%. Consequently, more than half (53%) of CMOs say stagnant consumer spending and low confidence levels will have the greatest impact on 2010 holiday sales. While still a concern, unemployment (22%) carries less weight on holiday sales this year, a notable decrease from 2009 (67%).
  • Gift Cards Continue to be a Key Promotion Strategy. Of the retailers who sell gift cards, 47% expect an increase in sales this holiday season. Forty percent expect flat sales and only 13% of CMOs expect a decrease in gift card sales. Retailers like Costco, American Express and Amazon are offering gift cards with varied price ranges and flexible spending options, which could satisfy shoppers who are looking for extra cash.

The BDO USA, LLP Retail Compass Survey of CMOs is a national telephone survey conducted by Market Measurement, Inc., an independent market research consulting firm, whose executive interviewers spoke directly to chief marketing officers, using a telephone survey conducted within a scientifically-developed, pure random sample of the nation’s retailers.