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bdo-2011-expected-holiday-same-store-sales-nov11.gifRetail CMOs forecast a modest 2.1% increase in their same store sales (referring to revenues of retail stores open for a year or more) for the holiday season compared to 2010, according to a BDO USA survey released in November 2011. Data from the “BDO Retail Compass Survey of CMOs” indicates that 54% of retail CMOs project flat same store sales for the holidays, while 37% expect comparable store sales to rise, down 23% from the 48% of CMOs who predicted an increase in 2010.

Meanwhile, according to recent ForecastIQ? data from Prosper Technologies, the October same store sales forecast appears to bring some retailers reason for cautious optimism this holiday season. 14 of the 27 retailers tracked are forecasted likely or almost certain growth in November and December. However, the outlook is tempered by 9 retailers that are likely/almost certain to experience decline and 4 that are forecasted to remain flat against a lackluster holiday season last year.

Sales Projections Slightly Better

According to the BDO survey respondents, overall holiday sales compared to 2010 are projected to increase 2.9%, much the same as an October NRF forecast of 2.8% growth. 48% of the CMO respondents predict sales to stay about the same, while 41% predict an increase, and 11% forecast a decrease. Respondents surveyed belonging to the top 100 retailers by annual sales revenue are slightly more optimistic, with a larger proportion (67%) predicting an increase in overall sales.

CMOs’ sales projections also largely mirror the spending predictions offered by consumers: data from a Gallup survey released in October shows little change compared with October 2010 in Americans’ estimates of spending on Christmas gifts relative to the year before (see link above). Roughly twice as many Americans reported they would spend less rather than more on gifts this year (29% compared to 15%), while 54% said they planned to spend about the same. The “spend less” figure was slightly lower than the 35% and 33% recorded in 2008 and 2009, respectively; years in which there were actual declines in holiday retail spending, according to National Retail Federation data. Historical Gallup data shows that holiday retail spending rebounded somewhat in 2010 after three years of highly anemic sales. Thus, if consumers’ 2011 Christmas spending intentions remain at 2010 levels, 2011 holiday retail spending could be flat, although at a modestly improved level from 2008 to 2009.

Consumers Electronics Seen Top Performer

The majority of respondents to the BDO survey, including 83% of the retailers surveyed in the top 100, believe that consumer electronics will be the top performing product category this holiday season. After electronics, retailers’ confidence in other categories wanes considerably: just 16% believe toys will be the top performers, followed by apparel (11%), home goods (10%) and lifestyle goods (8%).

CMOs Have Faith in Gift Cards

bdo-2011-expected-holiday-season-gift-card-sales-nov11.gifAmong the retailers surveyed that sell gift cards, 57% expect their gift card sales to increase compared to 2010, almost 5 times the proportion (12%) who predict a decrease. This represents a 21% rise in respondents from 2010, when just 47% expected to see growth in their gift card sales. Among retailers in the top 100, expectations are largely the same: 55% expect their gift card sales to increase from 2010, compared to 9% who forecast a decrease and 36% who expect them to remain flat.

Inventory Purchases Stay Flat

23% of retailers say their holiday season inventory purchases have measurably increased compared to 2010, while 13% say they have decreased. Overall, retailers’ inventory purchases are expected to rise only 0.7%, one-quarter the amount of increase forecast in 2010.

About the Data: The BDO survey examined the opinions of 100 chief marketing officers at leading retailers located through the country, including 12% of the top 100 based on annual sales revenue. The telephone survey was conducted in September and October 2011.

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