Wednesday November 22, 2006

Analysts Dreaming of a Green Christmas

UD experts predict a hot holiday retail season, but warn of a cooling economy after the new year.

Forecasts predict the average shopper will spend from $800 to almost $1,200 this holiday shopping season. The National Retail Federation expects a three to seven percent increase in holiday spending, while other reports forecast up to a 17 percent increase.

With holiday dollars expected to reach $457 billion this year, experts say consumers will be spending a lot in the stores, but even more so online.

"Of this amount, U.S. online retail sales are expected to increase 23 percent over last year to reach $27 billion," said Irene Dickey, a lecturer in the management and marketing department at the University of Dayton. "Despite continued dissatisfaction with shipping charges and concerns about returns and exchanges, the convenience, choice and control that consumers can experience online are expected to increase sales for e-tailers."

The huge spike in gasoline prices this summer and subsequent significant lowering is expected to add cash to consumers' wallets, and considerable optimism, which often drives spending, said Dickey.

However, analysts caution that the economy has slowed and will continue to slow into the first of the year, which will mean continued belt-tightening if consumers have extra debt from the holidays.

"A lot will depend upon the energy prices after the holidays and the severity of our winters in terms of the discretionary funds consumers have available," said David Sauer, associate professor of finance at the University of Dayton. "We didn't have as many hurricanes this year, so we didn't have disruptions in the oil supply. But other factors in the economy, such as the housing market, are still shaky."

Because the housing market has yet to rebound, "sales also will be slow in housing-related industries, such as furniture, carpets, appliances and home improvement," Sauer said.

But at least for now, consumers can do their part to stir the economy. For many retailers, the holiday season can account for up to 30 to 50 percent of annual sales, Dickey said, which is why the day is dubbed 'Black Friday'.

"It's when retailers are said to finally move out of the red, representing losses, and into the black, representing profits," Dickey said. "Consumers will see aggressive marketing promotions to attract them into their stores or onto their Web sites. Once they get there, there will be many more promotions to increase the average sale. You can count on this!"

For more information, contact Irene Dickey at 937-229-2025 or David Sauer at 937-239-8721. If you need to reach someone over the holidays, contact Linda Robertson at 937-367-2889.