Retailers have high hopes for holiday sales, Hay Group finds

PHILADELPHIA Retailers this year are far more optimistic about upcoming holiday sales than last year at this time, a survey conducted by Hay Group found.

As many as 64% of retailers expected holiday sales would increase over 2009, when just 28% anticipated a sales increase. Hay Group said that the survey, in its fourth year, analyzed responses from 20 major U.S. retailers in order to understand retailers’ plans for the 2010 holiday season.

Other highlights from the survey included:

• Seasonal worker staffing levels: Compared with 2009, 61% of retailers planned to hire the same amount of seasonal workers this year, and 22% planned to hire 5% to 15% more workers. While the majority of respondents (63%) indicated that the ratio of permanent to seasonal store employees is about the same as last year, 26% noted that they plan to hire fewer seasonal and more permanent staff this holiday season. Only 25% of respondents pay seasonal workers less than permanent staff, down from 33% in 2009;
• Slowdown takes its toll: When asked how they were affected by the recent slowdown in sales, only 17% of retailers noted that they hired fewer employees throughout the year. However, 13% of respondents said that they are delaying decisions about holiday staffing until closer to the holidays;
• Sales expectations: Retailers were decidedly more upbeat than in 2009 — no respondents indicated that they expected sales to decrease from last year, a dramatic change from the 36% who predicted a decrease in 2009. More than one-third (35%) of retailers predicted sales would increase by as much as 6% to 15%; and
• Store promotions: After the heavy discounting seen in 2009, retailers are shifting their strategy in order to more carefully manage their inventory levels. While 26% of respondents planned to run more promotions and deeper discounts than last year, most retailers planned to spread out their promotions over the season (50%), and 22% planned to start early, up from just 4% in 2009. Retailers also are continuing to downplay the importance of Black Friday promotions this year — only 22% are running the most promotions on Black Friday, compared with 2009 (35%) and 2008 (45%).

“Ultimately, retailers are still planning to accommodate the recession-battered consumer, with discounts and promotions running longer throughout the season than last year,” said Craig Rowley, VP and global practice leader for Hay Group’s retail practice. “But while the consumer may be more apt to spend, given retailers’ strict inventory management, the early bird is most likely to get the worm.”