Report Forecasts 4 Percent Rise in Holiday Retail Sales

NEW YORK -- While many reports show that brick and mortar businesses may see a drop in holiday sales this year, a new forecast by Big 4 accounting and consulting firm Deloitte states that the economy is improving at a gradual but steady pace, and retailers can expect moderate combined online and physical location sales gains.

"Rising home prices with steady job creation may buoy consumers' confidence in the economy and create a wealth effect," said Daniel Bachman, Deloitte's senior U.S. economist.  "The debt ceiling and budget debate will resume this fall alongside uncertainty about the implementation of health care reform, which may cause some concern among consumers, but at a macro level, these factors are unlikely to have a significant effect on the economy and retail sales."

Deloitte's Retail & Distribution practice expects total holiday sales to climb to between $963 and $967 billion[i], representing a 4 to 4.5 percent increase in November through January holiday sales (excluding motor vehicles and gasoline) over last season.  This growth rate is on par with last year's 4.5 percent gain.

Additionally, Deloitte forecasts a 12.5 to 13 percent increase in non-store sales.  Nearly three-quarters of non-store sales result from the online channel with additional sales coming from catalogs and interactive TV. 

"We anticipate non-store sales growth will continue to surpass overall retail sales growth," said Alison Paul, vice chairman, Deloitte LLP and Retail & Distribution sector leader.  "Additionally, shoppers researching their purchases electronically -- via their PC, tablet or mobile phone -- are increasingly influencing in-store sales, particularly as we see greater integration across retailers' store, online and mobile channels.  More retailers are offering services such as 'buy online and pick up in store,' as well as  inventory from other locations and price matching on the spot.  The store is still a core element of holiday shopping, and retailers leading the way this season will be those that effectively bring together their pricing, promotions, merchandise and inventory management across both their physical and digital storefronts."

Deloitte also anticipates that mobile-influenced retail store sales will account for 8 percent, or $66 billion[ii], in retail store sales this holiday season, driven by consumers' store-related smartphone activity such as product research, price comparison or mobile application use.  

"Retailers now realize how to engage shoppers through their mobile devices both inside and outside the store, which is having a profound impact on customer interaction, store traffic and conversion rates," continued Paul.  "Consumers using their smartphones are more likely to make a purchase compared with other shoppers in the store [iii], indicating that these activities are contributing to sales and keeping a shopper from turning to a competitor, contrary to the concern that 'showrooming' and price checking could negatively affect sales."