2012-10-18-Bain-Bain_Company_expects_a_third_consecutive_year_of_solid_holiday_sales_18页_2mb

Bain & Company 2012 Retail Holiday Newsletter Summary

Key Findings

• Bain expects GAFO sales to grow 3.5% in 2012 (slightly down from 3.7% in 2011) and e-commerce sales to increase by 16%.
• Holiday sales growth aligns with 2010–2011 levels, exceeding the 2.1% 10-year average.
• Digital retail is driving holiday growth, while macro factors like high gas prices and unemployment create headwinds.

Economic Context

Ups & Downs

• Gas Prices: Up 10% YoY; reduces disposable income by $100/capita heading into the holidays.
• Unemployment: At 7.8% (down from 9%, but still elevated); affects consumer spending with affluent groups least impacted.
• Wages: Stagnant; hourly earnings up 1.7% nominal in Q3 2012, but real wages unchanged over the last five years.

Positives

• Recent Sales Momentum: GAFO up 3.3% YoY to date.
• Consumer Confidence: At a five-year high, with indexes up 30% YoY.
• Housing/Equity Markets: Home sales up; S&P 500 up 15% YoY.

Consumer Segments & Spending Patterns

1. Affluent Consumers ($100k+):
   • 21% of households, 38% of spending.
   • Unemployment <4%, optimistic heading into holidays.
2. Aspirational Consumers (~$50k–$100k):
   • 29% of households, 33% of spending.
   • Optimism tied to housing recovery.
3. Lower-Half Consumers (<$50k):
   • 50% of households, 29% of spending.
   • High unemployment hurts spending, but relatively stable YoY sales.

Retailer Strategies

• Digital Retail Surge:
  • E-commerce up 15% in 2012 H1; expected 16% holiday growth.
  • Mobile commerce predicted to generate $11 billion in sales in 2012.
• Omnichannel Approach: Key to increasing sales; winners innovate with pickup in-store, online shipping, etc.
• Sales Variability: Retailers will see fluctuating profitability across categories, depending on pricing/strategy.

Risks & Fiscal Outlook

• Fiscal Cliff in 2013 could reduce after-tax income by 5.1–10.5% for affluent consumers.
• GAFO Growth so far in 2012 strong, but full economic recovery uncertain.

Charts Mentioned

• Gas Prices (Oct 2012)
• Unemployment Rate (Sept 2006–Sept 2012)
• Consumer Confidence Index (Sept 2006–Sept 2012)
• GAFO Growth over time (Sept 2009–Sept 2012)
• After-Tax Income Impact of Fiscal Cliff
• E-commerce Penetration (2007–2012)

Appendices (Definitions, References, Detailed charts per category)