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Lower Retail Sales Predicted This Holiday Season

'Tis the season to lower your expectations -- especially if you're a retailer counting on stellar holiday sales.

Mike Kraus
By:  | AllBusiness.com | 
Filed In: Retail and Industries
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The word is out. And it's one you may not want to hear. Everyone from ShopperTrak to the International Council of Shopping Centers to retail company CEOs are predicting a tough holiday season.

Most are predicting around 3 percent growth, barely keeping pace with inflation. That's not horrible, but it's off the surprise 4.1 percent growth that we got in 2010. Given that we live in ebb and flow cycles that crash like waves (or the stock market) every few days, it's anyone's guess as to how accurate those predictions really are.

According to an article in The Wall Street Journal on the retail holiday selling season, AlixPartners LLP reported that a full 41 percent of consumers plan to spend less this year than they did last year. Throughout 2011, consumers were spending more on each holiday compared to last year, regardless of whether it was Valentine's Day, Mother's and Father's Day, or any other major holiday. That trend started to fade, however, during the back to school season, and it's even less likely to continue through Halloween and into the holiday season. Blame it on a sputtering economy, high unemployment and consumer confidence that's in the basement.

So how do you prepare for what may be a lackluster holiday selling season?

1. Cut inventory. There's no use in bringing in more goods than you did last year if no one is going to buy them. Now is the time to trim back orders if you still can. It doesn't have to mean major cutbacks, it simply means you should plan on buying the same or slightly less than last year.

2. Discounts rock the holidays. All the major chains will be discounting right from the getgo, so you'll have to do the same in order to compete -- it's simply the mindset that consumers are in.

But as always, be careful. You don't want to give away the store in exchange for sales. After all, we're in business to make money. So never discount the entire store. Discount a few items heavily so you can blare a "save up to 50 percent off" message. Or put a specific brand or product group on sale.

The key is to have a few loss leaders to get people into the store. After all, that's what Wal-Mart does with $100 TVs. They figure if they can get you in with a great deal, then they can sell you a lot more because you're there. You should be operating the same way.

3. Action trumps planning. The best-laid plans can and do go awry. Make sure you have a marketing plan that focuses on intiatives to drive traffic on a weekly basis. It's better to get the people in the door early and potentially sell out of goods versus being stuck with the goods at the end of the holiday selling season. 

Plus, make sure you're tracking your holiday sales every day and every week beginning in late October or earlier. If the signs are pointing to lower sales (transaction counts are down, average transaction is down), then don't wait to pull out all the stops to get people in the doors -- that includes not only discounts but additional marketing initiatives like events or free gifts with purchases to drive traffic.

How are you going to beat the retail blues this holiday season? Sound off below.

For more great retail tips, trends and news, follow me on Twitter.

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