Holiday Sales Forecast Bleak for Most Retailers

BUFFALO, N.Y. - With the exception of supermarkets and well-known "e-tailers," most retailers can expect another dismal season of holiday sales, according to a University at Buffalo expert on retailing and consumer behavior.

"Consumer confidence is very shaky right now," says Arun K. Jain, Samuel P. Capen Professor of Marketing Research and Chair of the Marketing Department in the UB School of Management.

"Many consumers are in shock over their IRA and 401K statements and workers at all levels are seeing pink slips," says Jain. "With no end in sight to the nation's economic downturn, most households are reluctant to splurge on holiday shopping."

According to Jain, the problems are not limited to consumer demand. "Many retailers don't have their shelves fully stocked yet because of the lingering effects of the West Coast port strike," he explains.

Jain also laments the absence of any sensational products this season. "There is no Poo Chi or Tickle-Me-Elmo to create a frenzy," he says. "DVDs are practically commonplace and HDTV is still too expensive."

With more than half of annual sales occurring during the holiday season for many retailers, stores may be tempted to slash prices to attract shoppers. Jain warns that this tactic could backfire on retailers. "If a store sells its merchandise for 60 percent off, consumers will assume that they are being gouged the rest of the time," Jain cautions.

"If retailers really want to save holiday sales, they will find innovative ways to attract shoppers to their stores." Jain suggests. "Get a Santa, have a fashion show, bring in a children's choral group, have workshops for hobby clubs -- whatever it takes to make shopping fun again."

"The key is to get shoppers into the stores and make them feel good about being there," he continues. "They are much more likely to make holiday purchases while they are out with their families and enjoying themselves."

Well-known "e-tailers" like Amazon.com should fare better than their bricks-and-mortar competitors, according to Jain. "When you can get books at a 30 percent discount, with no tax and free shipping, it doesn't make sense to spend more at a physical store," he says.

Jain also says that retailers who offer low prices all the time definitely come out ahead in difficult economic times. "Target and Walmart will not be as hard hit as their pricier competitors," he adds.

But Jain predicts the biggest exception to the season's gloomy outlook will be supermarkets. "There is more emphasis on spending time with family and friends and enjoying the simple pleasures of life," he explains. "Supermarkets will do well if they keep their shelves stocked with a good variety and offer some exotic fruit and gourmet food options."