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Craft Marketing 2006

 

2006 Holiday Sales Predictions

Retailers Project Higher Sales but Lackluster Margins for 2006 Holiday Season

RETAIL SYSTEMS 2006 CONFERENCE & EXPO, CHICAGO: Oracle announced the results of a national study of retailer projections for the 2006 holiday season, revealing that, despite rising energy prices, the retail sector predicts strong sales growth over last year.

The majority of the study's respondents project solid sales growth (between 5 percent and 9 percent) or exceptional growth (more than 10 percent) over last year's holiday season. At the same time, however, nearly 90 percent of retailers surveyed predict flat or declining margins over last year, largely due to rising energy costs. These findings indicate that retailers plan to continue absorbing increased transportation costs instead of passing them along to consumers, ultimately impacting the bottom line.

The study also finds that retail organizations are investing in technology solutions to improve operational efficiency and enhance the customer experience to ensure a successful holiday season and ongoing profitability. Rising energy costs, it appears, are forcing retailers to move strategies for success closer to the customer.

Strong Sales, Weak Margins

Fifty-one percent of retailers surveyed project solid comparable-store sales growth (between 5 percent and 9 percent) for the 2006 holiday season over last year, and 5 percent anticipate an exceptional year (more than 10 percent growth).

Not all retailers are bullish, however, with 39 percent predicting flat sales, and 5 percent projecting declining sales.

Retailers targeting a robust season cite continued strength of the economy and the introduction of new merchandising strategies as key factors; those more pessimistic point the finger at rising gas prices as a consumer spending inhibitor.

Despite optimism about sales, retailers project a margin squeeze for the 2006 holiday season, driven by higher transportation costs and pressure for deep and early markdowns.

Sixty-one percent of respondents predict flat margins, and 27 percent project lower margins this holiday season.

-- 45 percent of retailers indicate the ability to project product demand will be among their greatest challenges this holiday season

-- 38 percent cite both optimizing the timing and level of markdowns and staffing issues as significant challenges

(see also CHRISTMAS TRENDS 2006)

.--Oracle Corporation


New book says consumers save by 'treasure hunting''

Modern American consumers see shopping as a "treasure hunt" for good quality and services, according to a new book by consultant Michael Silverstein. In the book, Treasure Hunt: Inside the Mind of the New Consumer, Silverstein suggests that consumers want more than just a good bargain: They want a treasure. Companies that offer "treasures" will fill a need of the modern consumer. By "treasure hunting" and trading down in price on certain items so they can trade up for others, consumers save about $100 billion per year, according to the book.

Such practices cause a dearth in spending in middle market, effectively splitting the $3.7 trillion U.S. consumer-spending market between the highest and lowest segments. Silverstein's Boston Consulting Group expects the $605 billion "trading up" segment to arrive at $1 trillion by 2010 and the $1.1 trillion "trading down/treasure hunting" segment to reach $1.5 trillion by the end of the decade.


Study reveals three-fourths of the US population buys organic products - up from 55% in 2000

A report released by The Hartman Group highlights consumer attitudes and behaviors fueling the organic trend. The report, Organic2006: Consumer Attitudes & Behavior, Five Years Later & Into the Future, provides insights into the lifestyle, shopping, purchase and usage habits driving the organic trend and finds that as organic products have become more available and accessible, consumers have responded - almost three-quarters of the US population buy organic products occasionally, and 23 percent of US consumers buy organic products on a regular basis.

Organics has overtaken "natural" as the buzzword for consumers interested in higher quality food based on both healthy and gourmet eating. "Organics stands at the heart of many American's food aspirations, even those who rarely purchase organics," said Laurie Demeritt, President & COO, The Hartman Group. The Organics 2006 report is a comprehensive analysis of the demographics, channels and adoption pathways of organic products consumption.

* Channels : Compared to five years ago, consumers are much more likely to use natural food stores to purchase organic foods and beverages: 29% were doing so in 2000, while nearly half (49%) are doing so today. Furthermore, while using grocery stores for organic purchases has fallen somewhat (from 63% of consumers in 2000 to 58% in 2005), using supercenter/discount stores for organics has increased (from 9% to 15%).

* Demographics : Compared to the general population, two ethnic and racial groups are somewhat more likely to purchase organics : Asian Americans and Latino/Hispanic Americans. Latino/Hispanic Americans and African Americans are much more likely than Caucasians to be what The Hartman Group terms "Core Organic Consumers," those most involved in the organics world.

* Emerging usage theme : In both quantitative and qualitative research, one of the strongest concerns expressed by consumers compared to five years ago is the impact of additional hormones in food products and their effect on children's health.

"Organic has less relevance for consumers when one moves into the center store and into categories that are inherently processed to a larger degree with numerous ingredients," said Michelle Barry, The Hartman Group's Senior Vice President of Consumer Insights & Trends. "The exceptions here are categories frequently eaten by children, where the value of organic is significant to the parent."

About The Hartman Group : The Hartman Group, Inc., founded 1989, is a full-service consulting and market research firm offering a wide range of services and products specializing on the health and wellness markets. The company's headquarters are located in Bellevue, Washington.


St. Patrick's Day

3/08/06 - Consumers are expected to spend nearly $2.7 billion this St. Patrick's Day. Retailers will be feeling the luck o' the Irish this Spring, as consumers get ready to spend some greenbacks on St. Patrick's Day. Consumers will spend an estimated $2.69 billion on St. Patrick's Day, up from $1.94 billion last year, according to the National Retail Federation's St. Patrick's Day Survey.

The average person will spend $27.94, compared with $22.95 in 2005.

"With the popularity of the holiday increasing, St. Patrick's day has become a tremendous day for restaurants and bars, as well as for traditional retail outlets," NRF President and CEO Tracy Mullin said. "Even small trinkets can be big sellers, as consumers respond favorably to retailers' special selection of holiday merchandise."

Being Green

Wearing green remains one of the most popular ways to celebrate, with 82.4 percent of those surveyed planning to don their green apparel.

Other ways consumers plan to join in on the festivities include going to a bar or restaurant (24.7 percent), decorating their home or office (19.9 percent) or attending a party (15.9 percent). Yet not everyone plans on heading out, with 31 percent of those polled planning on making a special dinner at home.

The NRF credits the increase in spending in part to more people celebrating the holiday. This year, 43.2 percent of consumers will celebrate St. Patrick's Day, compared to only 38.5 percent of consumers who felt the holiday spirit last year.


Online Spending for Valentine's Day

Total online spending for Valentine's Day rose 22 percent through Feb. 9, compared to the same period in 2005, according to comScore Networks.

The largest spending online occurred in the Health & Beauty category, which totaled $418 million, a 24 percent increase over the previous year.

Online sales in the Jewelry & Watches category totaled $219 million, a 24 percent increase compared to the same period in 2005.

Online sales in the Flowers, Greetings & Gifts category rose at a slightly slower rate, 17 percent versus 2005.

In January, more than 29 million Americans visited sites in the Flowers, Gifts & Greetings category, a number that is sure to rise in February, said the firm.


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