Retailers need to adopt different tactics in order to coax consumers to spend on more than just the bare necessities, Matthew Shay, president and CEO of the National Retail Federation told CNBC.
Getty Images
The trade group just released a forecast that calls for holiday 2010 sales growth of 2.3 percentin November and December. If this proves true, it will be the best performance since 2006. But even that increase would leave holiday sales below the $452.79 billion posted in 2007.
“We think it’s a number that is very reflective of the current challenges in the economy," Shay said. "And it’s the highest number we’ve seen in four years. So it’s not the rosy numbers we saw five or six years ago, but we think it takes into consideration the fact that we have a 9.5 percent unemployment rate."
Shay also said consumers continue to be cautious in their spending. They aren't convinced that the recession has ended, he said.
In order to be successful, retailers will need to focus on value and use other tactics such as staffing during peak times, keeping inventories lean, and finding innovative ways of using mobile and other technologies to drive sales.
On Tuesday, Accenture released its holiday spending survey. Their forecast called for flat spending, with the expectations that consumers will remain very frugal.
"There is certainly going to be discounting, there’s no question of that," Shay said.
Although it is tough to compare various holiday forecasts because different groups define both retail sales and the length of the holiday period in different ways, the NRF forecast is not the most optimistic to date.
On Tuesday, the International Council of Shopping Centers forecast an increase of 3 percent to 3.5 percent, compared with 2.3 percent last year during the same period.
Like Accenture, Nielsen is calling for flat holiday spending.
Meanwhile, Deloitte is predicting a 2 percentincrease for the November through January holiday period, compared with the 1 percent growth during that period a year ago.
Kantar Retail estimates fourth-quarter retail sales will rise 2.5 percent, compared with a 0.5 percent gain.
According to Mastercard Advisors' SpendingPulse, consumers continued to spend cautiously in September. Retail sales during the month showed modest growth, despite more challenging comparisons with the year-ago period.
But growth was uneven across the various sectors, with shoppers often spending only on what they most needed and only buying non-discretionary items very selectively.
On Thursday, many U.S. retail sales chains will report their results, providing more color on current consumer trends.
Questions? Comments? Email us at consumernation@cnbc.com
