New York City Deloitte Research revealed on Tuesday its 2008 spending forecast for the holiday season, which predicted only a modest increase in holiday sales over the 2007 season.
“Higher energy and food prices are making a dent in consumers’ wallets, and the dramatic drop in home-mortgage refinancings has dried up a substantial source of discretionary funds,” said Carl Steidtmann, chief economist with Deloitte Research, a subsidiary of Deloitte Services LP.
“In addition, continued softness in the housing market, rising unemployment claims and a volatile stock market are negatively affecting consumers’ perceptions of the economy, their wealth, and their ability to spend. In all, these factors will likely lead to a challenging holiday season.”
Deloitte’s Retail Group expects holiday sales, excluding motor vehicles and gasoline, to increase 2.5% to 3.0% during the November-to-January period, less than last year’s 3.4% increase, and one of the smallest gains since 1991’s 2.0% rise.
“Consumers are in a cost-conscious mood and more focused on value than ever before,” said Stacy Janiak, Deloitte’s US Retail leader. “Retailers that can offer unique value propositions—in terms of price, customer service, loyalty programs, or some other means—will be best positioned to attract the consumer’s attention.”
Janiak also commented that retailers appear to be well-positioned heading into the holiday season, with low inventory-to-sales ratios and payrolls and other costs that are in check.