Purdue News

November 7, 1997

Retailers' holiday wishes exceed likely profit margins

WEST LAFAYETTE, Ind. -- In almost child-like anticipation of Christmas, Hoosier retailers are expecting big things this holiday season. Unfortunately, their hopes may be too high, according to a Purdue University retailing expert.

More than 70 percent of Indiana retailers surveyed by the Purdue Retail Institute expected this year's holiday sales to exceed last year's by nearly 10 percent.

"In reality, this optimism isn't warranted," says Richard Feinberg, professor of consumer sciences and retailing. "Indiana retailers should expect holiday sales increases, but they should expect them to be in the range of 4 to 7 percent on average."

Nationally, experts predict that Christmas sales will average 2 percent to 4 percent over last year's. Feinberg says Indiana's holiday retail economy has tracked slightly higher than the national average for the past seven years that the survey has been conducted.

He says consumers are cautious, maybe even more so given the recent swings in the stock market. He lists other factors that will influence holiday sales:

There is no pent-up demand to fuel the holiday sales season. He says consumers have been increasing their spending modestly over the past six months.
The holiday season is still an important quarter for retail profits, but not as important as in the past. "Today's consumers are more likely to spend all year and buy at any time of the year," he says.
A recent American Express retail survey showed that Indiana consumers intend to spend less than shoppers in any other state this holiday season. Feinberg says the national average per household is $1,233, compared to $1,100 anticipated per household in Indiana.

In hopes of capturing record holiday sales, retailers are starting sooner and conducting more aggressive advertising campaigns. "In-store promotions will be very aggressive this year," he says. "Credit card holders should expect multiple special offers, and free gifts with purchases will be more common."

Hot-selling items expected to make many gift lists this year include compact discs, videotapes, portable compact disc players, power tools, cameras, and mid-priced jewelry. Feinberg says this year's hot toys are expected to be Barbies, Power Rangers, Beanie Babies, and Nintendo 64 and the Sony PlayStation and games for them.

"Because the weather has only recently cooled down, there may be some increased demand for winter clothing. This may also mean better-than-average sales for apparel and department stores," he says.

Source: Richard Feinberg, (765) 494-8296; e-mail, xdj1@vm.cc.purdue.edu
Writer: Beth Forbes, (765) 494-9723; e-mail; beth_forbes@purdue.edu
Purdue News Service: (765) 494-2096; e-mail, purduenews@purdue.edu

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