Study: Holiday Same-Store Sales to Fall 2.7%

New York City Chief marketing officers (CMOs) at leading U.S. retailers expect same-store sales for the 2008 holiday season to decrease from last year by a drastic 2.7%, according to a new study conducted by BDO Seidman. Thirty-nine percent of CMOs at leading retailers expect same-store sales to decrease this holiday season, while 41% expect sales to be flat and only 20% expect sales to increase. These findings are from the most recent edition of The BDO Seidman Retail Compass Survey, which surveyed CMOs at leading retailers throughout the country. The study was conducted after the financial market meltdown in September.

More than half (54%) of the CMOs cited uncertainty in the financial markets as the one external issue that will have the greatest impact on the holiday shopping season. Other issues cited were high energy and fuel costs (25%), unemployment (10%), the weak housing market (8%) and the presidential election (3%). The survey found that concerns about credit and the economy have led three-quarters (75%) of the CMOs to be more cautious about their sales and inventory purchase plans this holiday season.

An overwhelming majority (88%) of CMOs expect to offer more discounts and promotions this holiday season as a result of the economy and credit crunch, according to the study. Most of the CMOs (42%) cite that those discounts will take the form of in-store promotions, followed by markdowns (37%) and online promotions (20%).

“While there is much uncertainty in the retail sector this season, retailers have been consistent in citing reduced inventory purchases as a result of tightened credit and slow spending,” said Al Ferrara, a partner in the retail and consumer product practice at BDO Seidman. “Without a doubt, we can expect a very promotional environment that will appeal to cost-sensitive consumers, despite the impact it may have on shrinking margins.”