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Ernst & Young Predicts Challenging Season for Retailers.
Rising distribution costs that resulted from Hurricane Katrina will deliver a hit to retail spending this holiday, but consumers will still pursue luxury products, the Ernst & Young Consumer Trends Center said in a preliminary report released today.
The firm expects holiday sales increases for November and December to be 6 and 7 percent this year, compared to an 8.3 percent increase for the same period last year.
"It will be a challenging holiday season for most retailers, but many have back-up distribution plans and inventories that will help them cope with the effects of Hurricane Katrina," said Jay McIntosh, Americas Director of Retail and Consumer Products for Ernst & Young LLP. "To bolster traffic and sales, retailers will begin promoting earlier in the season and promote more frequently and aggressively than originally planned." Luxury items such as diamonds and jewelry, due to the growing luxury trend will continue to appeal to shoppers, and higher gas prices likely will boost Internet sales.
Ernst & Young issues a final holiday forecast in early November.
