Tis The Season- A Look At The 2007 Holiday Shopping Season
With gas costs skyrocketing, the worth of the dollar falling and the stock exchange issues of customers, in addition to the continuous credit crunch in the U.S., what effect will these and other elements have on the 2007 vacation shopping season?
According to the Commerce Department, retail sales last month (October 2007) published the weakest proving given that last August, with simply a tiny 0.2% boost, as customers continue to fight with the slumping real estate market and tighter credit conditions.
According to a projection by the National Retail Federation in September of 2007, they forecasted that sales for the 2007 holiday will increase to 474.5 billion dollars, which would represent a 4% boost over the previous year. This vacation sales increase falls listed below the ten-year average of 4.8% and would represent the slowest vacation sales development rate considering that 2002, when sales increased 1.3%.
Furthermore, eMarketer a relied on market research study company, anticipates that online vacation sales ought to go beyond 30 billion dollars (omitting online travel), which would represent an 18.5% boost over 2006 figures. In 2004, the development rate was 25.4% over 2003 and 2005 came in at a 21.5% rate over 2004 (with e-commerce vacation season sales at 21 billion) while sales for 2006 were at 26.2 billion and represented a 24.8% boost from 2005.
Emarketer reports that online sales in 2007 will be driven by the increased costs routines of existing online buyers who have self-confidence in the e-commerce system and that they will go shopping at unknown web websites to discover what they are looking for. It is likewise reported that these “experienced” buyers will go shopping later on in the season which they have faith that the e-tailers will satisfy their shipment needs.
Ian Shepherdson, who is the primary U.S. expert at High Frequency Economics, reports that the core retail sales have actually increased over the previous 3 months, however at the slowest annualized rate in 5 years and anticipates that this weak point will just magnify.
” We anticipate an additional degeneration as customers cut down in the face of skyrocketing gas rates, falling stock rates and the ongoing catastrophe in real estate,” Shepherdson described. “The holiday will be awful.”.
A study by Deloitte & Touche reports that Milwaukee, Wisconsin buyers prepare to invest less than they did last year and that those who were surveyed have a dimmer outlook on the economy than they did at the very same time last year. (The survey was performed online from September 24 through October 4, 2007, with an overall of 14,135 individuals reacting to the study throughout the U.S., that included 306 in the Milwaukee city location) Furthermore, just 6% of those surveyed stated they prepare to invest more this holiday, 51% reported that they prepare to invest about the exact same quantity as last season and a woeful 42% are preparing to invest less this year.
In addition, according to the very same survey, a few of the factors for investing less this holiday are greater energy expenses (59%), greater food rates (53%), greater financial obligation levels (34%), worries about the economy (33%), their understanding that the vacations are simply too business and costly (29%), task loss/pay decrease (20%), worries about their work (15%), greater home mortgage payments and rates of interest (15%), credit issues (7%), decreasing worth of their house (7%), the abovementioned volatility of the U.S. stock exchange (6%), bankruptcy/foreclosure at 2%, while “other” elements was available in at 20%. Another study, this one from the American Research Group in Charleston, S.C. reports that 58% of customers will be more price-conscious this holiday.
What do all these components inform us about the 2007 vacation shopping season? From all indicators, there is a bleak outlook for the 2007 vacation shopping season as customers continue to have problem with out of control gas costs, inflation, greater food and energy expenses, stock exchange unpredictability, greater financial obligation levels, the real estate issues, and the credit and loaning requirements being enforced by banks in the wake of a severe credit crunch. Online sellers will need to withstand the tighter wallets from their consumers with the online sales development being the most affordable in 5 years.
In addition, eMarketer a relied on market research study company, anticipates that online vacation sales need to go beyond 30 billion dollars (omitting online travel), which would represent an 18.5% boost over 2006 figures. This would be a drop from last season’s development rate of 25%. This drop-off is the least expensive development rate in the previous 4 years with 2003 e-commerce vacation season sales representing a 25.7% development rate over the previous year. In 2004, the development rate was 25.4% over 2003 and 2005 came in at a 21.5% rate over 2004 (with e-commerce vacation season sales at 21 billion) while sales for 2006 were at 26.2 billion and represented a 24.8% boost from 2005.