Newswise — You might want to start your Christmas shopping early this year.
According to Dr. Anthony Liuzzo, professor of business and economics at Wilkes University in Wilkes-Barre, Pa, who has been forecasting holiday retail sales since 1988, we can expect numerous shortages in holiday goods at December 25th approaches.
"Manufacturers and retailers seem not to be recognizing the magnitude of the current recovery," he says. "While consumers show every sign of a willingness to spend, inventory levels remain at very low levels. There will be few last minute discounts available, and shoppers are wise to shop early to get the best prices and largest selections."
"All early indicators suggest that this will be the best holiday retail season since the start of the millennium. Retail sales have been brisk, and have exceeded the forecasts of almost all of the major retail players," he says. "Consumers are demonstrating that they are willing to spend the tax cuts they are now seeing in their paychecks."
Liuzzo predicts retailers will see their most satisfying shopping season in several years, with sales increases totaling about 4 percent. In 2002, sales increased by only 1 percent, comparing to close to 7 percent in 1999, 2.5 percent in 2000 and 2.7 percent in 2001.
His preliminary forecast is based on a number of positive changes over last year, including:
"¢ Stability. "The more stable international climate than either in 2001 or 2002 should soothe consumers' worries and put them in a spending mood," he says. "What matters most is the public's perception of how foreign wars and economic crises will impact the United States. In 2002, consumers were uncertain about prospective military action in Iraq. In 2003, the situation is far more certain in Iraq and, barring another major terror incident, we can expect this certainty to translate into brisker sales." "¢ The stock market. "The market continues to show steady improvement," he adds. "This will have the effect of consumers noticing increases in their wealth with an attendant increase in spending." "¢ Consumer confidence. "All indicators of consumer confidence show that consumers are in the mood to shop. Indeed, the recovery to date has ben largely consumer driven, with businesses hesitating to acknowledge that the economy is expanding. Reliance on increases in worker productivity is certain to end in the near future. At that point, businesses will have no choice but to return to hiring." "¢ The Fed. "The Federal Reserve has shown that it remains aggressive in both stimulating the economy and protecting against the unlikely threat of deflation. The markets have seemingly finally placed trust in the Fed's implicit promise to hold interest rates down."
Liuzzo expects the latest tech toys " including flat screen televisions, DVDs, software, games and digital cameras " to continue to sell well. Apparel may also make a comeback.
Deep discounters will continue to flourish, he says. "The deep discounters have done extremely well in recent years; Wal-Mart continues to outperform its competitors," he says. "The middle retailers, including department stores like JC Penney and Sears, have not been performing as well as in recent times. Consumers have shown that they are price conscious as well as quality conscious. Given that we are in a recovery, we can probably expect this trend to continue."
Web sales continue to climb, but still represent a modest percentage of the total. "In 2002, there were about $210 billion in holiday sales in total. Web sales accounted for approximately $14 billion of this, or 7 percent," he says. "This was up from 3 percent in 1999, 4 percent in 200, and 5 percent in 2001."
Web sales still seem to disappoint e-tailers, who expected increases of 100 percent per year, but have only been realizing gains of 30 to 40 percent.
Seasonal retail is a big deal, says Liuzzo. "Holiday sales are generally defined as the same store sales made during the last two months of the year. These sales represent 25 to 30 percent of total year retail sales. Since 1990, profits have declined about 10 percent per year, indicating deep discounting and increased competition for consumer dollars."
"Contrary to popular misconception, the Thanksgiving weekend " including Black Friday " only accounts for about 10 percent of holiday sales, while retail sales during the weekend just prior to Christmas represent about 30 percent of holiday sales."
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