Smaller growth predicted in US holiday retail sales

I don't know how I missed this in my morning review of all the email bulletins I get!

by Alan Wolf -- TWICE, 9/7/2006 1:07:00 PM
Columbus,
Ohio — After two robust years of fourth quarter growth, overall retail sales are
expected to slow to a more moderate 5.5 percent clip this holiday season,
according to market research firm Retail Forward.

The forecast includes home improvement stores,
catalogs, online sales and the key retail sectors known as GAFO, comprised of
department stores, big box discounters and warehouse clubs; apparel stores;
furniture, home furnishings and consumer electronics stores; and other specialty
stores.

The projected 5.5
percent growth is lower than the 7.2 gain last holiday, and the smallest
increase since 2002, when holiday sales gained 2.8 percent.
While Retail
Forward senior economist Frank Badillo attributes the slowdown to higher
interest rates, a cooling housing market and steeper fuel prices, he cautions
that those factors will likely have an even greater impact on retail sales in
the first half of 2007.

The research group also predicts growth at consumer
electronics and appliances stores will slip slightly from last year, and that
sales at big box discounters and warehouse clubs, both one-stop shopping
formats, will continue to outpace most other retail channels again this holiday
season as high gasoline prices compel consumers to consolidate shopping
trips.

Online retail sales are projected to surpass $33
billion in the fourth quarter of 2006 compared with $27 billion last holiday
season, representing a year-over-year increase of nearly 23 percent. “E-commerce
will continue to represent the fastest growing retail sector this holiday
season, propelled by retailers becoming more aggressive online and consumers
growing more comfortable with virtual shopping,” Badillo said. The increase is
also attributable to rising Internet access and the impact of high gasoline
prices.
Despite the strong growth, however, online sales will only account
for a 3 percent share of all retail sales.

All of this jives with the general vibe I've been recieving from my friends and contacts in the retail channel, so I am inclined to side with Retail Forward's assessment.

But none of you come here to see me agree with stuff. You come here for insight, analysis, and a dose of snark. Just for you, here's some off the cuff takeaways for the holiday selling season:

• I expect to see Playstation3 launch with vigor into the arms of slobbering fanboys who buy a new game console system every time a new one comes out. The contricted inventory at launch pretty much guarantees a lot of hype and hoopla. Long term success of PS3, and by extension, the Blu-ray format will depend greatly on how well PS3 can live up to expectations, and once the fanboys start hollering about their new console all over the blogosphere, we shall see if the Buzz turns to Buzz-kill.
• Speaking of Blu-ray, and by extension HD-DVD, I expect sales of units that play either format to be weak this Christmas, driven hampered by supply chain issues, firmware glitches (which we've already seen ), and consumer apathy.
• You don't have to be clairvoyant to know that the new iPod models in the pipeline will sell like hotcakes, but I also expect the Toshiba-built, Microsoft-marketed Zune to do well, as the initial reports from the geek press have been very favorable.
• Media PC's will contine to grow as a category, driven by consumer interest, and hot new high powered units from HP, Dell, Gateway, and well, pretty much everybody.

More later, as time permits.

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