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ShopperTrak predicts 3% increase in holiday sales

Chicago -- Retail sales will rise 3% percent during November and December compared to the year-ago period, but foot traffic will decrease 2.2%, according to ShopperTrak.

ShopperTrak's holiday sales increase prediction follows 19 consecutive months of year-over-year U.S. retail sales growth. The expected increase is moderate compared with the 2010 holiday season's 4.1% sales increase over 2009.

Conversely to sales, ShopperTrak expects foot traffic to continue decreasing through the end of 2011, due to high unemployment rates and gas prices seeing a 33% increase this season over last. So far this year, shoppers have visited an average of 3.10 stores per shopping trip, down from 3.19 per shopping trip in 2010 and far less than the four to five stores visited in early 2008 — prior to the recession.

"The persistently high unemployment and fuel rates along with consumers' conservative purchasing attitudes will affect spending this holiday season more than in recent years,” said ShopperTrak co-founder Bill Martin. "Every shopper in a store will be more valuable than last year, and retail stores should be ready to convert their holiday shoppers into sales."

According to ShopperTrak, apparel and accessories sales will increase 2.7% while category foot traffic will decline 1.1% this holiday season compared to 2010. While consumers are expected to buy a bit more this holiday season than last, they are increasingly sensitive to value. Lower-end apparel and accessories specialty stores may be pressured to reduce prices to compete with discount chains. Higher-end stores, however, may have an advantage this season as shoppers seek quality purchases offering perceived value and longevity of use.

ShopperTrak expects the electronics & appliance sector's sales to increase slightly by 1.2% over last year, while foot traffic will drop 4.9%.The category's moderate outlook can be attributed to the limited number of blockbuster electronic products being introduced this season.

Value-conscious consumers are also increasingly using the Internet to stretch their dollars by shopping at online outlets with potential for deep discounts or researching premium priced, large purchases, ShopperTrak said. As a result, when consumers do walk into stores, they have a purchasing strategy and are less likely to browse. This will account for significant foot traffic losses this holiday season.

"As the economy continues to struggle, tracking daily foot traffic and understanding store traffic patterns is more important than ever," added Bill Martin. "Retailers who pay close attention to their browser to buyer conversion rates and adjust their product offerings, store layouts and staff scheduling to improve those rates will be the most successful this year."

ShopperTrak measures foot traffic in more than 25,000 stores in the United States and analyzes the data in a proprietary econometric model to create its National Retail Sales Estimate (NRSE) of general merchandise, apparel and accessories, furniture and other sales (GAFO).

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