Retail CMOs cautiously optimistic on holiday sales

Chief marketing officers at leading U.S. retailers are forecasting a 4.2% increase in overall holiday store sales, according to the 10th annual BDO USA survey.



This year’s BDO projection is only slightly higher than the National Retail Federation’s expected 3.7% increase to $630.5 billion, slower than the 4.1% increase during last year's November-December period.



According to the BDO survey, the majority of retailers (61%) believe sales will increase this year, with only 7% expecting a sales decrease, down from 12% last year. This could be due to signs of broader economic improvement, including the housing market’s continued recovery and lower energy prices. However, despite experiencing cost-savings at the pump, consumers continue to be price sensitive and the level of sales expected from the windfall of cheaper energy has not yet materialized, even with retailers (28%) citing energy and fuel costs as a major influence this year.



“The modest year-over-year increase could be attributed to increasingly parsimonious consumers, who are a product of the recession and not consuming as much as they once did,” said Ted Vaughan, national leader and partner in the Consumer Business Practice at BDO USA, LLP. “And because of this consumers are favoring a more strategic and cost-conscious approach, no matter the season.”



Vaughan added: “This new type of consumer is also not motivated by sales events and has become conditioned to hunt and wait for the best price, knowing retailers will turn to an intense discounting strategy to move product and spur sales.”



These findings are from the tenth edition of the BDO Retail Compass Survey of CMOs, which examined the opinions of 100 CMOs at leading retailers located throughout the country. The telephone survey was conducted in September and October 2015.



Additional findings of the 2015 BDO Retail Compass Survey of CMOs include:



Gift cards: It appears gift card sales are leveling off, with only 43% of CMOs expecting them to increase — down nearly one-third from 2013, when 61% of CMOs expected gift card sales to grow.



Retailers expect overall inventory to grow by 3.4%, up from 1.1 % in 2014, with half planning to increase their holiday season inventory purchases. This is nearly double the number of retailers who planned to increase inventory last year.



Overall, only a small percentage of retailers (26%) believe unemployment will have an impact on their holiday sales, down from 45% last year.



Sixty-seven percent of retail CMOs anticipate that consumer electronics will once again be the top-performing product category this holiday season, while 51% expect they will also be the most discounted.