IBM’s Retail Forecast: Back To School

Well, today’s U.S. jobs report for the month of August was a drag.  The number of net new jobs added?

Big zero.

But, there’s some goods news on the horizon, in particular the retail industry.

That is, of course, if you buy an analytics-based forecast recently produced by IBM.

Its retail forecast indicates that apparel sales are expected to post year-over-year gains during the fall shopping season, with especially big increases in sales of children’s apparel.

These findings, of course, have substantial ramifications for retailers preparing for one of their most important seasons of the year.

So how did IBM arrive at this forecast?  First, it relies on historical data and sophisticated analytics software developed by IBM to analyze both long-term trends and seasonal peaks.

IBM consultants use such predictive techniques to help retailers, manufacturers, and other IBM clients improve performance by addressing complex issues of supply and demand.

These techniques also aid in planning product mix and new store locations.

In producing the forecast, IBM applies analytics technology to economic data gathered by the U.S. Census Bureau.

The children’s apparel category stands out during this three-month period.  It is expected to total $2.659 billion, representing a 11.1% increase over the prior-year period. Women’s apparel, men’s apparel and footwear are all expected to post increases over the same period last year as well.

The sales projections for August, September and October 2011 are in the following chart (numbers in millions of dollars):

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The following chart contains actual sales figures for August, September and October 2010 (numbers in millions of dollars):

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The projected year-over-year change in sales for the three-month period is summarized below:

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The forecast indicates that for Men’s Apparel, September sales will be up 10.5% over the 20-year average. For Women’s Apparel, September sales will be up 2.15% over the 20-year average.

“This indicates that consumers are rotating between categories,” said IBM retail analytics leader Michael Haydock. “Adults are holding back on purchasing for themselves during their back-to-school shopping for the kids. But once the kids are in school, moms and dads will be looking to treat themselves. This category rotation, which became prominent after the economic downturn began in 2008, seems to be persisting.”

Haydock noted that it is important for retailers to understand these trends and adjust advertising, staffing and inventory accordingly to meet fast-changing demand.

He also highlighted the fact that disposable income, as reported by the U.S. Commerce Department, continues to be healthy this year, perhaps indicating pent-up consumer demand.

You can learn more about IBM’s Business Analytics and Optimization here.