US Retailers Expect Biggest Holiday Sales Gain Since 2007 As New Tablets Flood The Market

on November 05 2012 1:28 PM
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Leading retailers expect their holiday-season same-store sales to rise 3.7 percent, according to a BDO USA survey of 100 retail chief marketing officers. This marks the most optimistic forecast since 2007 as a flurry of new touch-screen toys were released just in time to stuff those Christmas stockings.

"While we haven't returned to pre-recession levels of optimism, retailers are gearing up for what looks to be a promising holiday season," Doug Hart, partner in the retail and consumer product practice at BDO, said in a statement. "Still, consumers have more choices than ever, and retailers are looking to avoid showrooming by curating a mix of exclusive and top-selling products to get consumers in their door or on their site."

Amid a barrage of new tablet announcements from tech giants including Apple Inc. (Nasdaq: AAPL), Microsoft Corporation (Nasdaq: MSFT) and Google Inc (Nasdaq: GOOG), the majority of chief marketing officers (62 percent) said consumer electronics will be the strongest-selling category in 2012.

In October, Microsoft released its new Windows 8 operating system and Surface, its first tablet. Amazon.com, Inc. (Nasdaq: AMZN) has Kindle Fire. And even Best Buy Co., Inc. (NYSE: BBY) announced that it’s getting into the tablet market.

Google is also trying to cram a few more gadgets on to the already crowded holiday shopping lists. Mountain View, Calif.-based Google announced last week three new versions of the Nexus devices -- Nexus 4 smartphone, Nexus 10 tablet and a larger version of the 7-inch Nexus 7 tablet.

This month, Apple launched sales of the smaller version of its iPad tablet and an upgraded version of its iPad at a company-held event in California. The Cupertino, Calif.-based company announced Monday that it sold 3 million iPads in the three-day weekend since sales of the iPad mini and fourth-generation iPad began Friday morning.

"We set a new launch weekend record and practically sold out of iPad minis," Apple’s Chief Executive Officer Tim Cook said in a statement. "We're working hard to build more quickly to meet the incredible demand."

According to the press release, 3 million units is double the previous first weekend milestone of 1.5 million set by the third-generation iPad in March.

A majority of the retail chief marketing officers said they believe consumer electronics will see the most discounts and promotions during the holiday season, according to the BDO survey.

Price-matching programs at Target Corporation (NYSE: TGT) and Best Buy suggest that retailers will be battling with both online and brick-and-mortar retailers for these purchases.

On average, retailers project a 4.7 percent increase in total holiday sales, which reflects slightly more optimism than the 4.1 percent projection released by the National Retail Federation in October.

Gift cards have become a $100 billion industry, and sales are expected to increase again this year, BDO said.

About 58 percent of retailers who sell gift cards expect gift cards sales will increase. The rise in popularity is likely due in part to the rise in digital gift cards from retailers like Starbucks Corporation (Nasdaq: SBUX), The Home Depot, Inc. (NYSE: HD) and Amazon.

“With gift card sales expected to be strong in November and December, retailers can expect solid headwinds for January sales as shoppers begin redeeming,” said BDO.

About 61 percent of retailers expect holiday season inventory purchases to stay at about the same levels as last year. And about 55 percent of them cite unemployment as a top worry, while 25 percent say energy and fuel costs are having the most impact on holiday sales.

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