Holiday season may be a bah-humbug for retailers

NEW YORK (AP) - It looks like retailers will have to work extra
hard to keep this holiday season from turning into a bah humbug.
A new forecast indicates that sales growth will likely not be as
high as last year and that shoppers won't be hitting the stores as
much.
Retail sales for the November and December period are expected
to rise 3 percent during what is traditionally the most critical
period of the year for retailers, according to the research firm
ShopperTrak. That would be below last year's 4.1 percent sales
growth.
The holiday sales prediction matches the outlook from the
International Council of Shopping Centers, which released its
forecast on Friday.
Shoppers have been cautious about spending through 2011, faced with uncertain economic conditions, rising gas prices and high
unemployment.
Heading into the holiday season, job worries are emerging as the
most important problem in the U.S., according to a recent Gallup
Poll. Thirty-nine percent of Americans in September cite
unemployment as the most important problem facing the country, up
from 29 percent in August, Gallup reported last week. This means
many consumers are still seeking out bargains, buying essential
goods over discretionary items and curtailing purchases for
themselves.
Another reason retailers may not be jolly this year is that a
measure of customer traffic in the stores is expected to be down
2.2 percent over the holidays. With shoppers hitting stores less
frequently or deciding to make online purchases instead, this means
retailers will be under even more pressure to get consumers to buy
when they are out at the malls.
"Every shopper in a store will be more valuable than last year,
and retail stores should be ready to convert their holiday shoppers
into sales," ShopperTrak co-founder Bill Martin said in a
statement on Wednesday. The research firm measures foot traffic in
25,000 stores in the U.S. and blends those figures with economic
data.
Holiday sales and traffic traditionally make up about 20 percent
of annual retail activity, according to ShopperTrak.
When consumers do head out to the stores for the holidays, the
divide that's been seen this year between luxury purchases and
bargain shopping will continue.
ShopperTrak says specialty shops that sell low-end clothing and
accessories may feel the need to cut prices to compete with
discount chains, but that upscale stores will likely be able to
cash in on consumers looking for goods they feel will hold up over
long-term use.
The retail analyst expects clothing and accessories sales to
rise 2.7 percent over the holidays, but for its traffic to dip 1.1
percent compared with a year ago.
Electronics and appliance sales are expected to rise 1.2 percent
from the previous year, but traffic is predicted to fall 4.9
percent. ShopperTrak says the category will likely be hurt as
consumers do comparison shopping and then buy online as well as the lack of any "hot" holiday product that will draw in more
shoppers. The demise of many of the nation's consumer electronics
chains, such as Circuit City, has also left consumers with fewer
places to shop.
The National Retail Federation, the nation's largest retail
industry group, is expected to release its holiday revenue forecast
early next month.

(Copyright 2011 by The Associated Press. All Rights Reserved.)


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