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Holiday Outlook Seen Mixed; Best Buy 'Locked And Loaded'

10/03/2011 12:01:00 AM Eastern

NEW YORK – Holiday sales forecasts and measures
of consumer sentiment paint a mixed picture
for CE in the fourth quarter.

The reports coincided with Best Buy’s release of
its own holiday plans, which include new initiatives,
enhanced return and price-match policies, and a
beefed-up multichannel presence.

At least three recent reports pegged total retail
sales growth at 3 percent for the holiday period,
while one of the analyses, by ShopperTrak, also
projected a more modest 1.2 percent increase in
CE and appliance revenue.

Global consultancy Deloitte said the expected
2.5 percent to 3 percent increase in total retail
sales from November through January represents a
50-percent drop from last year’s 5.9 percent holiday
gain. The International Council of Shopping Centers
(ICSC), a commercial real estate trade group,
projected 3 percent growth in general merchandise
sales for November and December, to $250 billion,
compared with a 4.1 percent increase for the twomonth
period last year.

Deloitte said that persistent weakness in the
housing and employment sectors, plus higher prices
for food and apparel, will temper several months
of rising consumer spending.

The outlook mirrors the findings of the Consumer
Electronics
Association’s
(CEA) monthly
Index of Consumer
Expectations
(ICE),
which shows
that consumer
confidence
in the overall
economy fell to
its lowest point
last month
since January
2007, when the
reports began.

September
was the fifth
consecutive month of declining consumer sentiment,
CEA said, while its Index of Consumer Technology Expectations
(ICTE), which measures consumer expectations
about technology spending, fell to its lowest level
since May, but remains up a point from last year.

“Sentiment took another step down in September as
deep drops in equity prices stymied any hope of a return
of consumer optimism,” said CEA chief economist
and research director Shawn DuBravac. Still, a dichotomy
continues to exist between consumer sentiment
and consumer behavior, he observed, with retail sales
and consumer spending holding their ground, particularly
within some tech sectors like tablet PCs.

Deloitte said merchants are positioned to weather
slow growth by operating at lean and efficient levels,
but should also “be nimble enough to quickly adapt and
adjust their inventory, assortment, pricing, and promotional
strategies when consumer demand fluctuates,”
advised vice chairman Alison Paul.

The consultancy, which is also forecasting a 14 percent
increase in direct-to-consumer sales, said retailers
that put online channels to work for their physical storefronts
will have a marketplace advantage. “The brickand-
mortar store is still central to the shopper experience,”
said Paul, who heads Deloitte’s U.S. retail and distribution sector. “Retailers that integrate the power
of the sensory experience in-store with relevant, timely
information via their websites and mobile applications
are well-positioned to lead the way this holiday
season.”

Best Buy CEO Brian Dunn adamantly concurred.
“The winning formula for the industry is neither a
physical store nor a digital platform alone,” he told
TWICE. He and chief
marketing officer Barry
Judge, who heralded
Best Buy’s holiday strategy
at the chain’s flagship
Union Square store
here last week, said the
company has a multichannel
advantage in its
vast in-store selection,
rapidly expanding online
assortment, knowledgeable
sales staff, and tech
and service support.

Holiday initiatives include the introduction this fall
of specially trained “connection specialists,” a product
of Best Buy’s Connected Store pilot, who will
help shoppers navigate the wide assortment of mobile
products and services.

Dunn also said the company will hire about half as
many seasonal workers this year than last, but will offer
its full- and part-time Blue Shirts extended hours
in order to have its most experienced associates on
the sales floor during the holiday rush.

The company will continue its no-restocking fee
policy which was initiated earlier this year, and will
also highlight a wide array of gift-appropriate products
priced under $100.

Other holiday enhancements include an extended
return period of Nov. 13 through Jan. 24; a promise
to match the price of any
brick-and-mortar competitor
on any identical product
between Nov. 13 and
Dec. 24, excluding Black
Friday and Cyber Monday;
limited Geek Squad
tech support at no cost
on all products purchased
between Dec. 25 and Jan.
1; and a free thirteenth
month of coverage with
all 12-month service contracts
purchased Nov. 20 through Dec. 31.

Dunn added that Best Buy is “locked and loaded”
with exciting promotions for Black Friday, which
should help incentivize cautious shoppers. “Consumers
are still very careful about how they spend their
money,” he said. “They want great value and brands
they can trust.”

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