Holiday Sales Outlook: Flat

With consumer apprehension continuing over the economy’s performance, retail sales this holiday season will remain flat, according to Deloitte & Touche LLP.

The forecast, based on a survey conducted for the firm by BIGresearch LLC, says general merchandise, apparel and furnishing sales will rise 0.5 percent at most.

The survey, which polled 20,000 individuals from Oct. 30 to Nov. 4, found that Southern Californians are less optimistic than the nation overall, with 62 percent of those surveyed feeling confident about an economic rebound next year compared to 66 percent of Americans. The figures represent 18 percent and 22 percent drops, respectively, in confidence from last year.

“Southern California is home to tech companies, and many have let employees go—that’s why we’ve been hit harder than other places,” said Tony Cherbak, partner in charge of the retail practice at Deloitte & Touche.

Most shoppers plan to curtail their holiday expenditures, according to the survey, with 48 percent of Southern California consumers planning on spending the same and 38 percent planning to pull back.

“People have taken hits in their stock portfolios and that along with layoffs creates consternation,” Cherbak said. “People will want to make their dollars go further.”

Discounters are poised to benefit from the holidays as shoppers seek thrifty and practical items. Apparel and toys will dominate gift-giving while luxury items, like jewelry, will suffer in terms of sales.

Department stores and specialty retailers will have to increase promotions to spur sales, according to Cherbak.

“Usually, the day after Thanksgiving is very promotional and then retailers scale back. This year, you’ll see more consistent promotions throughout the season, affecting all segments of retail, especially the apparel retailers,” he said.

That promotional activity will eat into margins, Cherbak noted.

“Profit will suffer slightly for retailers to achieve their sales plans,” he said. —Nola Sarkisian-Miller