Internet and Gift Card Sales Projected as Bright Spot this Holiday Season

[Guest Paige Holden]

According to a new study conducted after the financial market meltdown by BDO Seidman, LLP, one of the nation’s leading accounting and consulting organizations, chief marketing officers (CMOs) at leading U.S. retailers expect “Black Friday” (November 28 this year) sales will grow 1.2 percent this holiday season. These same marketing executives also anticipate that online sales for “Cyber Monday,” the first Monday after Thanksgiving, will grow by 2.4 percent this year. Fortunately, internet sales and gift card sales are expected to fare much better for retailers. CMOs are projecting internet sales to grow 8.0 percent and gift card sales to grow 5.1 percent this holiday season.

 

“While it is good to see growth, unfortunately this is down significantly from last year, when reports found that actual Black Friday and Cyber Monday sales grew 8.3 and 21 percent respectively,” said Ted Vaughan, a Partner in the Retail and Consumer Product Practice at BDO Seidman. “While seemingly dismal this year, it is important to remember that there are some bright spots on the horizon. There is still enormous growth potential in internet sales, which remains a fairly new phenomenon. Further, gift cards will be popular this year because they allow the end user to decide on the gift based on their personal needs.”

 

These findings are from the most recent edition of The BDO Seidman Retail Compass Survey which examined the opinions of 100 chief marketing officers at leading retailers located throughout the country regarding their expectations of the 2008 holiday shopping season. The retailers in the study were among the largest in the country, excluding automotive dealers and restaurants, with revenues of more than $100 million, including 13 percent of the top 100 based on annual sales revenue. The survey was conducted in October of 2008.

 

Some of the major findings of The BDO Seidman Retail Compass Survey of CMOs:

 

Holiday Sales Growth Looks Bleak. CMOs expect that comparable store sales will decrease this year by 2.7 percent and overall sales will decrease by 2.8 percent.

 

Consumer Electronics Expected Be Strongest Category. When asked about which product category will perform the strongest this holiday season most (49%) of CMOs cite consumer electronics. Electronics received far more mentions than home goods (16%), toys (15%), lifestyle goods, such as books and sporting equipment (13%), apparel (5%) and jewelry (2%).

 

Gift Cards Still a Bright Spot. More than one-third (37%) of retailers expect gift card sales to increase this holiday season over the 2007 holiday season, while 50 percent expect gift card sales will be flat and 13 percent think sales will decrease. Overall, retailers expect gift card sales to grow by 5.1 percent this season. Further, CMOs say that gift cards will account for 11.9 percent of overall holiday sales.

 

Gift Cards will Boost In-Store Sales. Most (44%) of retailers say that in-store purchases will be the biggest driver of gift card sales this holiday season, while 34 percent cite online purchases and 21 percent think third-party vendors (such as kiosks and grocery stores) will drive the most gift card sales.

 

Internet to Drive Sales This Holiday Season. When compared to the 2007 holiday season, half (50%) of retailers expect their internet sales to increase this holiday season, while 38 percent expect sales will stay the same and only 12 percent anticipate a decrease in sales. Overall, internet sales are a huge boon to retailers who anticipate 8 percent growth this holiday season.

Nearly Flat Black Friday Sales. The majority (68%) of CMOs anticipate that Black Friday sales will be flat this year, while 16 percent predict an increase in sales and 16 percent predict a decrease. Overall, sales are expected to grow by 1.2 percent over last year’s sales. Last year, CMOs projected Black Friday sales to account for 15.1% of total holiday sales.

 

Slight Lift for Cyber Monday. Twenty percent of CMOs cite an increase in Cyber Monday sales, while 64 percent predict a flat Cyber Monday and 16 percent predict a decrease. Overall, Cyber Monday sales are expected to grow 2.4 percent this year. Last year, CMOs projected Cyber Monday sales to account for 12.3% of holiday internet sales.

 

The BDO Seidman Retail Compass Survey 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 largest retailers (with revenues ranging from over $100 million to billions of dollars).

 

BDO Seidman, LLP has been a valued business advisor to retail and consumer products companies for almost 100 years. The firm works with a wide variety of retail clients, ranging from multinational Fortune 500 corporations to more entrepreneurial businesses, on a myriad of accounting, tax and other financial issues.