Surveys predicting grim holiday season

The predictions are in, and the outlook is dim: Shoppers will not break the bank this holiday season, according to surveys released this week, and retail employment will drop, according to one forecast.

Total holiday sales are expected to be the same as or less than in 2008, despite signs of an easing recession heading into the industry's most critical quarter, according to a survey released today by Philadelphia's Hay Group Inc. and two others earlier in the week from Deloitte and Retail Forward Inc.

If sales remain flat, as the reports predict, the quarter will rank as the second-worst in 52 years, according to Retail Forward, of Columbus, Ohio. And one of the reports suggests a sales drop from last year's pace is even possible.

Deloitte said sales unchanged from last year would mean about $810 billion for the November through January period. Last holiday season, sales fell 2.4 percent from the year before.

"Retailers are planning for a challenging Christmas season," said Craig Rowley, vice president and global practice leader for Hay Group's retail practice in Dallas.

Deloitte based its forecast on high unemployment, tight consumer credit, and continuing home foreclosures, said Tara Weiner, managing partner of its Greater Philadelphia office.

"In any recession, the consumer is the last to feel the recession and the last to recover," said Weiner, adding that consumer attitudes may improve in mid-2010.

Hay Group's data came from 25 U.S. retailers - including American Eagle Outfitters Inc., Best Buy Co. Inc., Saks Inc., and Target Corp. - that replied to its annual survey.

Seventy-two percent said they expected sales would be the same as or lower than last year. More than half have made plans to reduce staffing levels, even though the number of job applicants is up. Twenty-eight percent expect sales to grow.

Retailers will spread sales over the entire season and de-emphasize Black Friday a bit, Hay Group said, referring to the day after Thanksgiving. They also will limit inventory and payroll to contain costs, said Maryam Morse, Hay Group's national retail-practice leader.

But the deals for shoppers may not be as great as last year, when the stock market crash left retailers desperate to unload mounds of unsold merchandise at deep discounts.

"I don't think you're going to see the same kind of desperation you saw last year," Morse said. "Just enough markdowns and promotions to get you in the store, and it's going to be on key items that are going to draw you in."