Retailers See Positive Signs for Holidays : Survey: But merchants, who expect luring customers into stores to be more expensive than ever, are guarded about expectations for bottom lines.
Two-thirds of the nation’s merchants--and about the same proportion in Orange County--expect consumers to spend as much or more on their gift purchases this holiday season compared to last year, according to a survey by a large accounting firm.
But retailers realize that luring customers into the stores will be harder and more expensive than ever, requiring them to offer lower prices and promote more heavily.
Consequently, they are guarded about expectations for their own bottom lines. About 40% say that they expect sales and profits to be flat or only marginally higher during November and December, while about 33% expect higher results, the survey by Deloitte & Touche found. Of retailers surveyed in Orange County, 36% expect holiday earnings to be little changed from last year.
The results of the survey, taken in October, are the latest indicator of a rebound in spending. Recent monthly sales reports and some consumer polls have suggested that shoppers will spend more this holiday season and reverse a three-year retail tailspin.
“Although it’s too early to draw conclusions, our retailer findings show some positive signs for the holiday season,” said Irwin Cohen, national partner and co-chairman of the Trade Retail & Distribution Services Group of Deloitte & Touche. “Retailers have brought their businesses more in line with reality over the last several years but seem to have heightened expectations for this season as compared to prior years.”
The release of the survey comes, too, after what many merchants say was a booming sales weekend at Orange County malls. Retailers say they hope that the long lines at the cash registers on Saturday and Sunday are indications of a good season to come.
“There is potentially a bit of optimism for the Christmas season due to the lessons that retailers have learned about operating in a tough economic environment,” said Tony Cherbak, director of retail services for Deloitte & Touch in Costa Mesa.
Retailers have hunkered down and tried to position themselves to maximize their profits even if 1993 turns out to be another lousy year for selling, Cherbak said.
The Deloitte & Touche survey included 1,175 retailers.
A separate study by the company last month that drew responses from 1,011 consumers found that they expected to spend an average of $616 for holiday purchases. Half of those planned to shop at department stores or mass merchandisers, and another 35% at discount houses.
The two surveys showed a gap between what consumers and retailers think are the most important factors in choosing a store. Customer service was ranked by merchants as the top determinant of where an individual will shop this year, while consumers most often mentioned “everyday low prices.”
In Orange County, 32% of the retailers listed promotions as first in importance to shoppers, while 28% cited customer service as No. 1.
Jack Kyser, economist at the Economic Development Corp. in Los Angeles, said the results of the retailers’ poll reflect rising expectations.
“Nationally, there is growing sense that the worst of the recession is over,” he said.” “There is still hope locally,” he said. “The situation probably won’t get worse and may improve a bit. The outlet malls and discounters are expecting sales increases, but many department stores are expecting a drop in sales.”
Nearly 60% of retailers surveyed nationwide and 62.5% in Orange County think that President-elect Bill Clinton’s Administration should make restoring consumer confidence a top priority.
The survey also found that 52% of merchants nationally and 54.7% in Orange County expect the rate of inflation to increase by this time next year.
Holiday Optimism
Guarded optimism is the word among retailers this year. Responding to a survey of what they expect for the holiday season, two-thirds of the nation’s retailers said they expect consumers t remain conservative in this still-sluggish economy. Shoppers are expected to spend the same or more than last year. Why Retailers Think Consumers Are Choosing Their Stores
Retailers are banking on the hope that enhanced customer service and price markdowns will increase their sales this holiday season. Emphasis on service: 24.1% Price promotions markdowns: 22.1% Better-quality merchandise: 16.0% Everyday low prices: 10.4% Larger selection: 10.0% More exclusive merchandise: 8.8% Convenient location: 8.6% How Much Consumers Plan to Spend
Shoppers in their pre-retirement years--between the ages of 50 and 64--are expected to be the most generous this holiday season, spending 45% more than those of retirement age. 18 to 24: $569 25 to 34: $626 35 to 49: $661 50 to 64: $694 65 and over: $480
Source: Deloitte & Touche, Trade Retail & Distribution Services Group
