Holiday sales predicted to climb slightly

While their outlooks ranged from slightly upbeat to downright pessimistic, a group of retail analysts on Wednesday agreed on one thing—there will be growth in retail sales this holiday season.

“This is not the worst of times, but it’s certainly not the best of times, either,” said Carl Steidtmann, chief economist for Deloitte Research.

Steidtmann and three other retail gurus gathered this week to discuss the state of retail for a luncheon sponsored by Fashion Group International.

The range of predictions for holiday sales increases ranged from Steidtmann’s call for growth of about 6% from 2002 levels to a less optimistic 3% predicted by Daniel Barry, managing director of Merrill Lynch.

Barry, noting the shortest shopping season possible this year—46 days from Thanksgiving to Christmas—along with other factors like a possible war with Iraq and plummeting consumer confidence, describes this holiday season as the worst in a decade. If his 3% prediction holds true, this would be the smallest growth in a non-recession year in half a century.

Steidtmann, however, countered that while confidence is down, initial unemployment claims is also down from last year—signaling an improved employment market and a surge in home mortgage refinancing will add about $200 billion to Americans’ discretionary income from now through 2003.

“The consumer is in the position to spend this year,” he said.

Other retail experts agreed that the season will not be an easy one, and offered up advice on how to emerge ahead of competitors this year.

With retail space expanding too quickly and consumers becoming saturated, the best way to succeed, according to Robin Lewis, president of Robin Lewis, Inc., is to focus on distribution. In an age of lightning-speed knockoffs, it’s a matter of not only offering new merchandise to customers, but also getting it to them quicker.

“Just to survive you have to get your current customer to buy more and to do that, you have to steal sales from someone else,” he said. “You have to give them something new and be in their faces first, faster, and more often than the competition.”

Walter Levy, managing director of retail trends and positioning for Kurt Salmon Associates, meanwhile, advises retailers to be in better touch with consumers, to understand, for example, their time-starved nature and offer convenience. According to Levy, retailers are too focused on merchandising according to supplier advise, rather than listening to what their consumers want.

“It is the market and societal trends—not fashion trends—that are driving retail growth today,” he said.