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.”