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1. Holiday 2010 modestly outpaces estimates.
Retail sales will exceed the range of estimates (flat to about 2 percent higher than the year-earlier period.) The modest gains stem from strong sales of hot electronics such as Apple’s iPad, Microsoft’sKinect, and inexpensive flat-screen TVs; and to a decision, particularly among higher-income consumers, to treat themselves a little better after two years of sacrificing.
Still, sales will not return to pre-recession spending patterns (although online spending gains will reach pre-recession levels). This is a brief blip of extra spending to satisfy some pent-up needs. Consumers will remain careful about their spending in 2011.
2. Teen retailer shakeout.
With teen unemployment high, retailers have been waging a war to win their share of the limited teen budget over the past year, and the battle scars are starting to show. The line between the winners and losers will become more pronounced by the end of 2011. The damage will be so severe that some companies will be forced to bow out or take drastic strategic steps.
3. Private equity shops the retail sector.
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