Deloitte Web Cast Makes Retail 2007 Predictions

On Jan. 18, Deloitte announced several predictions for retail in 2007 as part of its Webcast "Consumer Economic Update: Has Goldilocks Finally Come Home?" Speakers included Patrick Conroy, vice chairman and national managing principal, consumer business industries, Deloitte & Touche USA, and Carl E. Steidtmann, chief economist and director of consumer business, Deloitte Research, Deloitte Services LP. Deloitte reported that in 2006, retail sales were relatively good, with the overall sector up 6 percent. However, there was a decline in retail employment, which means retail productivity has increased, but this could also mean retailers have become too stringent on labor costs. The Webcast polled the audience and asked "What is your outlook for consumer spending '07?," with 60.4 percent of respondents saying that consumers will cut back some in 2007, but that we also will see small gains in consumer spending. Additionally, general merchandise, apparel and furniture had a somewhat disappointing holiday season, and record warm temperatures made winterwear sales decline, while floods in the Midwest resulted in store closings. Gift card sales were strong, but these numbers don't get recorded until the card itself is redeemed. Deloitte predicts that the disappointing holiday season will be followed by a slightly better season in the first half of 2007. The outlook equals a challenging year ahead, with growth probably in the 4.5 to 5.5 range. And with the level of inflation in this sector heading south, the volume of growth will likely be similar to 2006, Deloitte predicted.