Holiday: Retailers predict good volume, tough margins
May 23, 2006,
Chicago – Retailers expect holiday 2006 to be strong on sales but tough on margins, suggesting that retailers plan to absorb rising energy and transportation costs rather than pass them on to consumers, according to software company Oracle.
While 51% of retailers surveyed projected comp growth between 5% and 9% for the 2006 holiday season over last year, the next largest group, 39%, expect comps to be flat. The extremes were fairly well matched, with 5% predicting an exceptional comp growth of 10% or better, and another 5% anticipating comp declines during the season.
The majority, 61%, expect flat holiday margins, and 27% project lower margins. Executive management and IT management are more pessimistic about margins than senior management (merchandising, planning, marketing managers, etc.) and store operations respondents, Oracle said.
Retailers cited staff training as the single investment that yields the greatest ROI for their companies, followed by inventory planning and management solutions. Oracle surveyed 186 executives across the country, including national chains, regionals, and independent retailers. Roughly one-third of the respondents operate businesses with revenues over $1 billion, with 28% of respondents running businesses between $100 million to $500 million. Another 22% operate businesses of less than $5 million.