Gear & Garden 2011 Holiday Outlook & Gift Guide Source: Retrevo September “core outdoor” retails sales jumped 17 percent year over year, an increase of more than $60 million. It represented the “strongest September on record,” since Leisure Trends began tracking outdoor sales in 1998, said Scott Jaeger, Leisure Trends senior retail analyst. Little clarity is provided by looking at the intent of CFOs. Retail chief financial officers surveyed by financial advisory firm BDO USA were split over whether going short on inventory or going long poses a greater risk this year. Carry too much and they could face steep discounts come the new year. Stock too little and they could run low and miss out on sales, similar to what happened to many stores in 2009. Even so, the general consensus is that retailers are being careful with their dollars this winter. Surveys by the National Retail Federation, says Shay, indicate retailers have planned for lean inventory levels, ordering conservatively but making arrangements to receive expedited deliveries closer to Christmas if demand picks up. “While businesses remain concerned over the viability of the economic recovery, there is no doubt that the retail inventory industry is in a better position this year to handle consumer uncertainty than it was in 2008 and 2009,” says Shay. A financial statement analysis of privately held U.S. retailers by Sageworks, meanwhile, found that inventories heading into the holiday season were somewhat higher than full-year levels between 2008 and 2010, at least in terms of inventory days. However, as a percentage of assets, inventories aren’t particularly higher than the past few years. According to Sageworks, retail inventory currently is about 28.62 percent of assets so far in 2011, compared to 28.24 percent of assets in 2010. Less than half a percentage point also separates 2011 levels so far from 2009 levels, when retailers ordered cautiously, show Sageworks’ figures. Conservative inventory strategies come as little surprise when considering the overall sales projections of most industry groups and analysts heading into holiday 2011. While any growth is welcomed in the current environment, the general consensus pegs this year’s growth at somewhere between 2 and 3 percent over holiday 2010. That’s considerably lower than the 5.2 percent increase retailers saw in 2010, according to NRF, but in line with the 10-year average increase of 2.6 percent. For the outdoor market specifically, which has tended to outperform the larger market throughout this most recent recessionary period, we wouldn’t be surprised to see year-over-year growth in the high-single-digit to lowdouble-digit range. That could be realized in part due to improved sales of high-priced and big ticket items, as well as a boost from shoppers picking up items for themselves while out gift shopping. Before you spike the eggnog, however, keep in mind that any growth this year will come at a cost. Despite unfavorable macroeconomic pressures, shoppers surveyed by Citigroup say that they will spend 2 percent to 4 32 | <strong>InsideOutdoor</strong> | <strong>Fall</strong> 2011 percent more this holiday season than they did a year ago. However, there are indications that discounts and promotions will be even more important this year, and consumers expect those discounts to be bigger and start earlier than in years past. Nearly two-thirds (64 percent) of consumers said Inventory Days = (Inventory/COGS) *365 Privately Owned Retailers’ Inventories (NAICS 44, 45) 56 55 54 53 52 51 50 49 48 30.5% 2005 2006 Source: Sageworks Inventory Days = (Inventory/COGS) * 365 29.42% Inventory percentage of assets 28.89% 28.11% 28.37% 28.24% 28.62% 2007 2008 2009 2010 YTD 2011 31.0% 30.5% 30.0% 29.5% 28.5% 28.0% 27.5% 27.0% 26.5% they need to see discounts between 30 percent and 50 percent to justify a purchase, show Citigroup figures. That’s up from the 54 percent who said the same thing last year and the 47 percent who said this in 2009. Citigroup also found that coupons and BOGO programs have lost popularity, as respondents push for percentage or dollar off promotions. Likewise, more shoppers will be hunting down deals on Black Friday, with as much as 62 percent of respondents expecting to battle crowds on the day after Thanksgiving, compared to the 49 percent who planned to do the same thing in 2009. Furthermore, 75 percent of shoppers indicated that they would do some holiday shopping before Black Friday, up from 69 percent in 2010, according to Citi Investment research. And whereas about one in five shoppers said they would be heading to a traditional department store this holiday season, a full 61 percent of those surveyed said they would be doing some shopping at a discount retailer. The upshot for retailers could be a Christmas stocking filled with increased sales but at tighter profit margins. In other words, we could be facing more traffic, a longer season and higher payroll costs for little or no revenue increases. It’s not exactly the most cheerful of holiday outlooks, but all things considered, it could be worse. As for some good news, the following Holiday Gift Guide includes some last-minute suggestions for all types of gift-giving and gift-receiving outdoor enthusiasts, most of which fall within the primary gift price range and still can be delivered to your store in time for the final Christmas rush. Inventory as percentage of assets
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