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Deloitte forecasts 2.5% to 3% increase in holiday sales

BY Marianne Wilson

NEW YORK — Retailers should expect small gains in 2011 holiday sales, according to a Deloitte forecast issued Monday.

The company’s retail & distribution practice expects total holiday sales to reach between $873 and $877 billion, representing a 2.5 to 3% increase over last season.

"Consumer spending was on the rise for several months despite dampened confidence in the economy among U.S. households," Deloitte’s chief economist Carl Steidtmann said. "Those earlier gains have begun to flatten and may be tempered by persistent weakness in the housing and employment sectors and pressures from the European debt crisis. Despite some relief in energy prices, consumers may feel the strain from food, apparel and other categories where prices are markedly higher compared to the previous holiday season. Additionally, retailers will face tougher comparisons this year after last year’s substantial increase in holiday sales."

Additionally, Deloitte forecasts a 14% increase in nonstore sales, with nearly three-quarters of the sales resulting from the online channel with additional sales coming from catalogs and interactive TV.

"Double-digit growth in the nonstore channel has given the industry a major boost, and retailers that put online channels to work for their physical storefronts have the advantage," said Alison Paul, U.S. retail and distribution sector leader and vice chairman for Deloitte LLP.

Paul noted that the brick-and-mortar store is still central to the shopper experience.

“Retailers that integrate the power of the sensory experience in-store with relevant, timely information via their websites and mobile applications are well-positioned to lead the way this holiday season,” she said. While economic events have the potential to soften consumer spending this season, businesses are already operating at lean and efficient levels and positioning themselves to weather a period of slow growth, according to Paul. But she warned that retailers should be prepared with contingency plans.

"Retailers need to be nimble enough to quickly adapt and adjust their inventory, assortment, pricing and promotional strategies when consumer demand fluctuates,” Paul said.

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Tylenol slugger expected to knock ’em out of the park this season

BY Michael Johnsen

WHAT IT MEANS AND WHY IT’S IMPORTANT — With Tylenol coming back to cough-cold and analgesic aisles over the next six months, you can bet the brand will soon resume its status as the cleanup hitter for Team OTC. That not only means a reshuffling of the lineup, but the respective No. 9 hitters will be packing their bags for a trip back to the minors.

(THE NEWS: Report: J&J resumes shipping of Tylenol product. For the full story, click here)

Another thing you can count on — fans, or consumers rather, won’t punish Tylenol for its self-imposed stint on the DL. When consumers were surveyed by the Relational Capital Group a year ago about purchase intent and brand loyalty for Tylenol, 76% of consumers reported positive purchase intent and 67% positive brand loyalty for Tylenol.

“As you look at the Tylenol situation, consumers are interpreting [McNeil’s] production problems as a short-term lapse in competence, rather than a significant change in what their intentions are toward consumers,” Chris Malone, chief advisory officer of The Relational Capital Group, told Drug Store News at the time of the announcement. “When we look at the Tylenol brand, it appears that there is such a long track record of reliability and trust and a deep reservoir of good will,” he said, that consumers generally don’t believe J&J intentionally cut any corners in an effort to boost profits.

And that was then. Consumers have short memories, and that means those positive purchase intent and brand loyalty figures from a year ago likely are back to historical levels. In other words, consumers today are not likely to remember there even was a recall.

The real question will be whether or not retail buyers will give as many facings back to McNeil as they had prior to the recalls. A good many of those facings were replaced by store brand equivalents, and private label has been a booming business of late. For the 12 weeks headed into this year’s cough-cold season, private-label sales were up 25% and represented the bestselling "brand" across cough-cold tablet sales with $186.7 million (source: SymphonyIRI Group for the 12 weeks ended Aug. 7 across food, drug and mass channels (not including Walmart).

No matter how many facings McNeil does or does not recapture, many analysts believe that Johnson and Johnson will come back to the market with a vengeance and some pretty deep advertising pockets. And that means plenty of traffic-driving influence will be going over the airwaves this season.

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Ingles Markets declares cash dividend

BY Allison Cerra

ASHEVILLE, N.C. — The board of directors of Ingles Markets declared a quarterly cash dividend per share on all of its class A common stock and class B common stock.

Class A common stock was 16.5 cents, while class B common stock was 15 cents. This is an annual rate of 66 cents and 60 cents per share, respectively.

Dividends of both classes of stock are payable on Oct. 20 to shareholders of record on Oct. 6.

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