10th Annual BDO Retail Compass Survey of CMOs Reveals U.S. Retailers Predict 4.2 Percent Increase in Total Holiday Store Sales

— Holiday Sales Feel Effects of Cost-Conscious Consumers —

CHICAGO–(BUSINESS WIRE)–A skittish market and diminished back-to-school sales have U.S.
retailers feeling cautiously optimistic for the upcoming holiday season.
According to the BDO
USA
survey, chief marketing officers (CMOs) at leading U.S.
retailers forecast a 4.2 percent increase in overall holiday store
sales, consistent with growth expectations in 2014. This year’s
projection is also only slightly higher than the National Retail
Federation’s expected 3.7 percent to $630.5 billion, slower than the 4.1
percent increase during last year’s November-December period.

 
Holiday Season Total Store Sales Forecasts
2015       2014       2013       2012       2011       2010       2009
+4.2%       +4.1%       +3.8%       +4.7%       +2.9%       +3.5%       +2.5%
                                   

Similar to 2014, the majority of retailers (61 percent) believe sales
will increase this year, with only 7 percent expecting a sales decrease,
down from 12 percent last year. This could be due to signs of broader
economic improvement, including the housing market’s continued recovery
and lower energy prices. However, despite experiencing cost-savings at
the pump, consumers continue to be price sensitive and the level of
sales expected from the windfall of cheaper energy has not yet
materialized, even with retailers (28 percent) citing energy and fuel
costs as a major influence this year. Reaffirming this is the less than
stellar back-to-school sales, which resulted in an underwhelming August
and September for retailers.

“The modest year-over-year increase could be attributed to increasingly
parsimonious consumers, who are a product of the recession and not
consuming as much as they once did,” said Ted
Vaughan
, national leader and partner in the Consumer
Business Practice
at BDO
USA, LLP
. “And because of this consumers are favoring a more
strategic and cost-conscious approach, no matter the season.”

Vaughan continued “This new type of consumer is also not motivated by
sales events and has become conditioned to hunt and wait for the best
price, knowing retailers will turn to an intense discounting strategy to
move product and spur sales.”

These findings are from the tenth edition of the BDO Retail
Compass Survey of CMOs
, which examined the
opinions of 100 CMOs at leading retailers located throughout the
country. The telephone survey was conducted in September and October of
2015.

Additional findings of the 2015 BDO Retail Compass Survey of CMOs
include:

Gift Card Sales Settle. It appears gift card sales are leveling
off, with only 43 percent of CMOs expecting them to increase—down nearly
one-third from 2013, when 61 percent of CMOs expected gift card sales to
grow.

Inventory Levels Set To Increase Despite Cautious Optimism. This
year, retailers expect overall inventory to grow by 3.4 percent, up from
1.1 percent in 2014, with half planning to increase their holiday season
inventory purchases. This is nearly double the number of retailers who
planned to increase inventory last year. Signs of broader economic
improvement and growing consumer confidence may be encouraging retailers
to ramp up their inventory levels: The Conference Board reports that its
consumer confidence index increased to 103 in September—its highest
level since January.

Unemployment Diminishes As A Concern. Overall, only a small
percentage of retailers (26 percent) believe unemployment will have an
impact on their holiday sales, down from 45 percent last year. Healthy
job growth—reaching an average pace of 200,000 jobs added per month
since 2013—could be contributing to this notable decrease in concern.
This is also the first year since 2009 that unemployment is not the
leading issue predicted to impact sales. And, with the global economy
experiencing sharp and lasting pains, like the devaluation of the yuan
in the world’s second largest economy, the number of retailers worried
about global market volatility tripled, from 7 percent in 2014 to 21
percent this year.

Consumers Continue To Display Their Love For The Latest And Greatest
Technology.
Sixty-seven percent of retail CMOs anticipate that
consumer electronics will once again be the top-performing product
category this holiday season, while 51 percent expect they will also be
the most discounted. According to the U.S. Consumer Electronics Sales
and Forecasts, revenues for the consumer electronics industry are
projected to grow 3 percent this year and reach an all-time high of
$223.2 billion. Meanwhile, apparel (cited by 14 percent of CMOs) is
expected to remain the second highest performing segment.

The BDO Retail Compass Survey of CMOs is a national
telephone survey conducted by Market Measurement, Inc., an independent
market research consulting firm, whose executive interviewers spoke
directly to chief marketing officers, using a telephone survey conducted
within a scientifically-developed, pure random sample of the nation’s
retailers.

About BDO
USA

BDO is the brand name for BDO USA, LLP, a U.S. professional services
firm providing assurance, tax, financial advisory and consulting
services to a wide range of publicly traded and privately held
companies. For more than 100 years, BDO has provided quality service
through the active involvement of experienced and committed
professionals. The firm serves clients through 63 offices and more than
450 independent alliance firm locations nationwide. As an independent
Member Firm of BDO International Limited, BDO serves multi-national
clients through a global network of 1,328 offices in 152 countries.

BDO USA, LLP, a Delaware limited liability partnership, is the U.S.
member of BDO International Limited, a UK company limited by guarantee,
and forms part of the international BDO network of independent member
firms. BDO is the brand name for the BDO network and for each of the BDO
Member Firms. For more information please visit: www.bdo.com

Contacts

Bliss Integrated Communication
Emily Dell, 212-584-5483
Emily@BlissIntegrated.com
@BDOConsumer