Trend: Visa Predicts (Holiday 2006)

Visa predicts three key 2006 holiday sales trends.
Visa USA has predicted that overall retail sales in the US, excluding vehicle purchases, for the 2006 holiday season will grow by 7.5% compared to 2005 - only slightly lower than the growth rate of holiday sales in the previous two years.

According to Wayne Best, senior vice president of business and economic analysis at Visa USA, this year's mixture of lower energy prices, positive employment trends, and a slow-down in the housing market suggests a sustainable holiday shopping season and bodes well for specific sectors such as personal entertainment, sporting goods and hobby stores, and specialty retailers. But this year's winners will also include e-retailers, who stand to benefit from overcrowded shopping malls.

Based on an analysis of spending using Visa-branded credit, debit and prepaid cards, Visa USA predicts three major trends for the coming holiday season:

1. Consumers will seek out value-for-money purchases
The Federal Reserve's pause in raising interest rates combined with the soft real estate market is expected to cause home owners to be cautious about using their home equity line of credit as a supply of disposable cash. Although Visa anticipates a decrease in big-ticket durable goods spending as a result, consumers are still expected to make "value purchases", including personal items and activities that are most valued (such as dining out, personal services and family entertainment), all of which will help drive personal entertainment consumption.

2. Travel and tourism off to a slow start
Fewer bookings in September 2006 (a month which is traditionally a strong indicator for holiday travel behaviour), combined with lower fuel prices, would suggest decreased travel and tourism spending during the holiday season, and an increase in consumers taking shorter, more regional trips.

3. The web remains a key tool for time-challenged consumers
As the US workforce continues to rebound, many consumers will find themselves short on time, thus turning to e-commerce channels for holiday shopping. So-called "Cyber Monday" (the Monday following the Thanksgiving weekend) will remain a popular time for online purchases, as consumers try to fit their shopping around busy schedules while avoiding crowded shopping malls.

"Americans will continue to look for value purchases that won't leave them strapped for cash in the long run, which is why big-ticket items such as furniture and appliances will not be as popular as in previous years," said Best. "The exception will be big-ticket personal entertainment products, such as high-definition televisions, which should see good growth."
Visa also expects big-box and general retail stores to experience moderate growth, but not quite at the same level seen in 2005. However, restaurants are expected to record positive holiday figures, at least in line with 2005's growth.

via Visa.com and Wise Marketer