As we approach the traditionally busy holiday shopping season, retailers are holding their collective breath. Will consumers shop? And will sales rise? A new report by BDO USA, LLP suggests that retailers have room for optimism.
BDO USA, LLP is comprised of chief financial officers (CFOs) at large retailers across the country. Historically, CFOs have a reputation for being conservative so their optimism for the rest of 2010 is definitely good news. This group is looking for a 1.95% increase in sales this year. Much of the confidence in this forecast is based on the improved back-to-school season which brought in a 3% sales bump this year.
Major findings from this survey include:
- Brighter Outlook for Overall Sales – 44% of CFOs expect sales to increase in 2nd half of 2010
- Inventories to Increase – 42% of CFOs say they expect to increase inventory early next year to meet expected rising demand.
- Operating Costs Seen as Margin Threat – CFOs will keep a tight rein on operating costs (38%), inventory levels/markdowns (29%) and costs/sourcing of products (38%) to protect profits
- E-commerce is a Growth Channel – Just over half of these retailers have an e-commerce site. Of these, 38% expect sales growth of 5-10% this year and 34% expect a 10% sales increase in this channel this year.
This improved optimism bodes well for the economy in general. The results, especially the findings with respect to e-commerce growth, mean that these retailers will likely increase marketing expenditures as well.[Source: Retail CFOs Forecast Sales Increase. BDO USA, LLP. 4 Oct. 2010. Web. 12. Oct. 2010]