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What’s Next For Your Micro-Business
Holiday Season Could Be Stormy For Small Retailers
Small retailers should prepare for a possible rough ride as the 2005 holiday season approaches.
First there was Hurricane Katrina. Then Rita. Higher gas prices showed up on every street corner. There is also a rising tax burden, anemic job growth and increasing inflation – which could all trigger heightened challenges for consumer spending through the end of 2005.
Together those events are expected to contribute to an increasingly difficult outlook for retailers, according to Deloitte Research’s Leading Index of Consumer Spending.
But the National Retail Federation (NRF) isn’t predicting doom and gloom for the shopping season. Total holiday retail sales are expected to increase 5 percent over last year, bringing holiday spending to $435.3 billion. In comparison, holiday sales in 2004 rose 6.7 percent to $414.7 billion.
The monthly Michigan Retail Index survey for September, conducted by the Michigan Retailers Association (MRA) and Federal Reserve Bank of Chicago, could shed light on national retailing trends for the holidays. The survey found that 54.7 percent of retailers are not changing their ordering plans from last year, while 29.5 percent are reducing orders and 15.8 percent are increasing them.
“The data suggest that the overwhelming majority of retailers are being cautious about the upcoming holiday season,” said MRA Chairman and CEO Larry Meyer
What You Can Do
The NRF reports that one-fifth of retail industry sales (19.9 percent) occur during the holiday season, making it the most important time period of the year for the industry.That means small retailers must be ready to grab their slice of the holiday spending pie.
Pat Conroy, vice chairman and national managing principal of Deloitte’s Consumer Business practice, offers this advice:
“With the current level of uncertainty surrounding the consumer’s ability to spend, retailers need to continue to be vigilant about their inventory levels, costs and effective promotional strategies.
“They must also increase their focus on converting consumers they have attracted into their stores into buyers. Finding better ways to positively impact these conversion rates will be a critical element to retailers’ success this upcoming season.”
NRF President and CEO Tracy Mullin suggests that retailers prepare to offer discounts and promotions early in the holiday season.
“Consumers won’t have to wait until the last minute to get the best deals this year because retailers are expected to be aggressive in their pricing strategies throughout the entire holiday season,” Mullin says. “Stores are planning for holiday sales and promotions, so discounted prices won’t have a negative effect on profits.”
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(Posted October 2005) |
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