2009-10-23-Bain-Bain_Retail_Holiday_Newsletter_1_15页_350kb

Bain Retail Holiday Newsletter #1 Analysis

Date: October 24, 2009

Key Points

1. Holiday Forecast:

   • Anticipates a turnover from negative growth trends for the 2009 holiday season.
   • GAFO (General Merchandise, Automotive, Food Services, Other) growth between 0% and 1% compared to the previous year.

2. Economic Context:

   • Indicates stabilization in key economic indicators including housing prices, consumer confidence, and household wealth.
   • GDP contraction slowed to -0.7% in Q2 2009 compared to -6.4% in Q1.

3. Consumer Behavior:

   • Most consumers remain cautious but savings rates have increased significantly (nearly 5% up from over 1%).
   • Consumers are prioritizing value ("flight to value") and comparison shopping; however, some exhibit "frugal fatigue" seeking to spend.
   • Spending choices dictated by economic caution and recent life experiences.

4. Sector Performance:

   • Furniture and Home Furnishings segment hardest hit (-$21B YoY sales drop).
   • Electronics and Appliances (-~$7B) continue to see steepest declines due to delayed purchases.
   • General Merchandise showed positive growth turning in September.

5. Retailer Strategies:

   • More cautious approach with leaner inventories to minimize discounts.
   • Increased use of layaway programs, store credit cards, and multichannel (online/offline integration).
   • Focus on experience marketing (in-store events) to attract customers.
   • Price promotions expected but less aggressive compared to 2008.

6. Outlook:

   • 0% to 1% growth favorable compared to last year (-5.3%) but below historical averages.
   • Forecasts future improvements in consumer spending provided profitability opportunities exist.

Introduction & Purpose

• Summarizes post-recession retail trends for the holiday season.
• Goal is to provide actionable insights for US retail partners to capitalize on the coming season despite economic uncertainties.

Conclusion & Outlook

• The holiday season presents a benchmark for recovery with limited inventory, providing a solid platform for 2010 growth if managed properly.
• Future updates scheduled throughout December.