Retailers and Retail and Real Estate & Retail

Purdue expert predicts modest bump in holiday shopping

November 1, 2011

American shoppers are expected to open their wallets just a little wider this winter holiday season, pushing sales up 2 percent to 4 percent, according to an estimate released Tuesday by the Purdue University Retail Institute.

But online purchases will surge 15 percent, according to predictions prepared by Richard Feinberg, a Purdue professor of consumer sciences and retailing. He also expects small local shops to struggle as recession-weary consumers flock to large discount- and value-oriented retailers.

“The fact that we will have an increase in holiday sales is a miracle,” said Feinberg, pointing out the national unemployment rate of 9 percent, with many more having given up looking for work.

Feinberg expects $475 billion in total holiday sales, with the biggest single item purchased being gift cards.

He also expects near-constant sales promotions, which retailers have used in recent years to capture gun-shy customers.

Retailers will use more direct e-mail marketing this year, as they have noticed they get much higher response rates than when using snail-mail direct-mail advertising. Retailers are also trying to drive customers to their websites, both for online sales as well as to promote their stores.

"Retailers are beginning to realize that their online presence has the potential to be their biggest store. This has led them to pay attention to their Internet presence in ways they have not done in the past," Feinberg says. "They also are finding that a well-designed website not only leads to online purchases, but to more store visits, too."

Last month, the National Retail Federation, the nation's largest retail trade group, predicted winter holiday sales would rise 2.8 percent, to $465.6 billion.

That would be smaller than 2010's 5.2-percent increase, but it's higher than the average increase for November and December over the past 10 years.

And it would continue a recovery begun last year after holiday sales fell the previous two years. They dropped 4.4 percent in 2008 and 0.4 percent in 2009.

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