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Home » Report Forecasts Holiday Spend Up 4.5 Percent

Report Forecasts Holiday Spend Up 4.5 Percent

November 15, 2012 by Publisher

holiday spend forecastThe 2012 Annual Retail Report from FTI Consulting, Inc., a global business advisory firm, finds consumer confidence is approximately 25 percent higher entering the 2012 holiday shopping season than it was a year ago. The report forecasts U.S. holiday spending will increase 4.5 percent this year and projects that online retail sales in the U.S. will grow by 13.5 percent in 2013, surpassing $250 billion, and eventually will top $460 billion in 2020. It also predicts market share of online sales will approach 15 percent of retail sales by 2020 and plateau near that percentage. The online channel has bounced back sharply from the recession and has consistently grown at about three times the rate of store-based sales. Consumers have become savvy using the Internet for research and shopping and implicitly trust it as a transaction medium. The broad use of smartphones and tablets gives consumers the unprecedented ability to comparison shop anytime, anywhere.

FTI Consulting estimates that if the economic recovery continues at its current pace, it will have taken between five and seven years for sales in many non-essential product categories to reach their pre-recession levels. While retail sales have improved since 2010, the progress has been relatively modest compared with the sharp declines experienced during the recession. Sales of autos and categories impacted by the housing bust, including home improvement, furniture and appliances, still trail pre-recession sales levels of 2007. Nominal sales growth in these categories remains positive but not strong enough to make up all ground lost in 2008-2009.

“Overall, consumer spending trends have been fairly impressive considering the financial anxieties still felt by many Americans,” says Bob Duffy, global co-leader of the FTI Consulting Corporate Finance/Restructuring practice. “Despite slowing momentum in recent months and lingering concerns over income growth and employment prospects, sales growth trends have managed to stay within the range of historical averages. We find consumer spending across a number of product and store categories to be fairly encouraging and anticipate this vigor will continue through the holiday shopping season. High-end retailers, as well as deep discount and off-price chains, should perform well in the current environment.”

Steve Coulombe, senior managing director in the FTI Consulting Corporate Finance/Restructuring practice, adds, “The online channel remains a game changer for large retail chains, and many have turned what once was regarded as a threat into an opportunity. Online is taking a bigger slice of the pie, and we are seeing large product categories with smaller but sizable online market shares such as apparel, home furnishings, toys and sporting goods becoming the moving force behind today’s growth of online sales.”

The 2012 Retail Report considers retail sales in the GAFO categories (general merchandise, apparel, furniture and home furnishings, and other miscellaneous categories) and non-store sales for November 2012 through January 2013.

Category: Ecommerce, Marketing & Management, Retail News Tags: holiday sales

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