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BDO survey: U.S. retailers forecast 2.9% increase in total holiday sales

Chicago -- Results of a survey released Wednesday by BDO USA found that chief marketing officers at leading U.S. retailers expect a modest 2.9% increase in total holiday sales this year.

This is a less optimistic point of view compared to the projected 3.5% increase in 2010 (and the actual 5.2% increase reported by the National Retail Federation). Overall, 41% of CMOs expect an increase, down from 2010 (52%) and 2009 (47%). However, CMOs at the top 100 largest retailers included in the sample are more optimistic, with 67% expecting an increase in overall holiday sales.

Survey findings showed that retailers also fear another year of excessive discounting and markdowns to clear inventory. While 23% say they have increased inventory purchases for the holidays, the vast majority (65%) say their inventory purchases have stayed about the same compared to 2010. Overall, CMOs expect inventory levels to be up by less than 1% (0.7%) – a far cry from the 2.8% increase projected in 2010. Most CMOs (52%) also say they’re making no change in SKUs. Overall CMOs project SKUs to be down slightly (-0.2%), meaning less variety for consumers.

“With a weak jobs outlook and the economy still in flux, most retailers are not expecting big sales increases this holiday season,” said Doug Hart, partner in the Retail and Consumer Product Practice at BDO USA. “However, larger retailers appear to be more confident that their greater purchasing power and resources will allow them to be more competitive in this environment. Across the board retailers are dialing back the recent trend of expanding merchandise offerings, and are instead looking for a signal of recovering consumer spending before making big inventory investments.”

Some of the major findings of the BDO Retail Compass Survey of CMOs include: holiday same-store sales are projected to increase 2%. More than half (54%) of retail CMOs project flat same-store sales, and just 37% expect an increase.

The majority – 58% -- of CMS say that consumer electronics will be the strongest performing category this holiday season, followed by toys (16%), apparel (11%), home goods (10%) and lifestyle goods (5%).

Of retailers who sell gift cards, 57% expect an increase in gift card sales this holiday season, a notable jump from 2010 (47%) and 2009 (32%).

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