Deloitte Predicts Two Percent Increase in Holiday Sales

Despite some signs that the economy is beginning to rebound, consumer cash flow continues to be restricted by both sluggish employment and protracted weakness in the housing market. As a result, a new forecast by Deloitte is cautioning retailers to anticipate only a modest two percent increase in 2010 holiday sales.

All told, Deloitte researchers expect total holiday sales to reach $852 billion a sum total that represents a two percent increase in November through January holiday sales (excluding motor vehicles and gasoline), over last season. (Keep in mind that this projected growth rate is a slight improvement over last year's measly one percent gain.)

Interestingly, though, Deloitte is also forecasting a 15 percent increase in non-store sales. Nearly two-thirds of non-store sales are from the online channel, with the remainder coming from catalogs and interactive TV.

"The convenience and functionality that have fueled e-commerce gains in previous seasons will continue to draw consumers online to do their shopping this year," said Alison Paul, vice chairman and Deloitte's retail sector leader in the US. "Online activity may also influence in-store shopping this holiday season, as social networks and mobile applications are playing a more prominent role in the shopping process. As such, retailers should seek to deliver tightly-integrated and consistent merchandise, inventory and promotional messages to customers moving between web-based and physical storefronts."

According to Paul, retailers appear to have started to moderately rebuild inventories after deep reductions last year. She says that they will need to sharpen their game to move merchandise this season to capitalize on sales gains without dampening profit margins.