Fall - InsideOutdoor Magazine

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 | InsideOutdoor | Fall 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