Archstone Consulting`s 5th Annual 2009 Holiday Forecast Projects Holiday Retail Sales to Be Down by 1%

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Forecasting the first Back to Back contraction in 40 years of Data Tracking
STAMFORD, Conn.--(Business Wire)--
Archstone Consulting, a leading management strategy and operations consultancy,
today announced it is forecasting 2009 Holiday retail sales will decline by 1.0%
compared with the 2008 Holiday season (which saw a -2.8% decline compared with
2007). This will represent the first back to back decline in Holiday retail
sales in the last fourdecades (according to U.S. census data for retail sales)
and is a somber reflection of continued challenging economic times.

* "In the last 40 years, the U.S. economy has faced seven official recessions.
Each recession has had a profound dampening impact on holiday retail sales
during and immediately following the recession," commented ToddLavieri,
President and CEO of Archstone Consulting. "While the economy is slowly emerging
from this terrible recession, the confluence of tightening credit (for many
retailers and consumers), higher unemployment, and continued financial
uncertainty in terms of jobs and income will bring caution to the consumer and
lower holiday sales."

Lavieri continued: "With 7 million fewer people employed in the US this holiday
season compared to 2008, many consumers will remain under considerable financial
stress and will stay frugal."

Key Influencers Affecting 2009 Holiday Retail Sales:

Archstone`s modeling and research assessed the impact of a range of
macroeconomic factors as well as recent consumer behavior and classified them as
having a significant, moderate, or minimal impact on 2009 holiday retail sales
growth:

Influencers on 2009 Holiday Retail Sales
Significant Impact Moderate Impact Minimal Impact
Personal Credit Consumer Confidence Foreign Investment
Savings Rate Housing Market Cash for Clunkers ( Appliances)
Unemployment Inflation
Wages Stimulus Impact
Retail Inventory Levels Stock Market
Changes in Consumer

Shopping Behavior

Availability of personal credit

* "Tight restrictions on consumer credit means many consumers are simply unable
to buy on credit as they had prior to the financial crisis. Tightened consumer
credit will continue to negatively impact overall holiday sales," commented Dave
Sievers, Principal and the Consumer Products and Retail Practice lead at
Archstone Consulting.

* In reaction to recent credit card legislation (which takes effect February
2010), credit card companies have clamped down by raising rates and fees and
even canceling cards.
* Consumer credit (loans and credit cards) fell by a record $21.6 billion in
July to $2.5 trillion.

Savings rate

* "Whether the new higher savings rate relative to last year is the "new normal"
is questionable. However, given strains on the American consumer, it looks like
it`s here to stay at least through the end of the year as people repair their
personal balance sheets, and rebuild their net wealth," commented Sievers.
"These savings are unlikely to now be spent for gifts."

* In July, the personal savings rate dipped slightly to 4.2% from a record high
of 4.5% in June but it is still high, compared to a 2.6% savings rate vs. a year
ago.

Unemployment

* "Unemployment and nagging job insecurity will limit both the ability and
willingness to spend and will have a significant impact on dampening holiday
retail sales," commented Lavieri.
* US unemployment at 9.7% reported in August is the highest it`s been in decades
and is expected to hover at that level for the rest of the year and well into
2010.
* Overall US Civilian employment declined to 59.2% of the population in August
2009; down from 61.9% in September 2008.

Wages

* "Falling wages and high unemployment are two sides of the same coin as a
dampening effect on holiday retail sales with households struggling with
spending priorities and personal balance sheets," commented Sievers.

* Wages and unemployment are inversely correlated, and we`ve seen wages plummet
4.1% in August vs. a year ago, matching the decline seen in Q2 2009.

Retail inventory levels

* "Retailers are being very conservative and will keep inventory levels tight
this season in an attempt to avoid the discounting bloodbath of last year. We`ve
seen this manifested in trends in inbound cargo (a proxy for retail inventory)
which is at its lowest level in at least seven years (down ~20% from peak 2007
levels)," commented Lavieri. "That will mean fewer sizes, styles and colors at
the retail shelf. Further, credit availability for retail inventory builds has
been tighter. De-stocking of retail inventory has followed de-leveraging of
retail balance sheets. With fewer items to sell, and pricing still under
pressure, sales will be unable to grow. Additionally, we have seen hundreds of
small, local retailers across the country close their doors this past year, thus
taking some of the smaller, impulse purchases out of the equation this season."

* "In addition to cutting inventory, retailers will be lowering "in store"
merchandising costs this season. That will mean less labor helping customers and
keeping store merchandise appealing and available," continued Lavieri.
* One big wildcard in the retail numbers will be H1N1 - if it is pervasive
during the Holiday shopping weeks, traffic will be diverted from stores to
on-line.

Consumer behavior

* "We have seen significant changes in shopping behavior as sales data show the
trend of trading down to discounters continues to prevail at the expense of
continued losses in higher end stores. Indeed, value retailers such as Toys R US
and TJMaxxmay be examples of the few bright spots in retail," commented Sievers.
"The Toys R US strategy to add store fronts in unused retail space for the
Holiday season is an excellent market share move," added Sievers. "They have
shown nimbleness and aggressiveness that should help them add to their Holiday
numbers."
* "In response to a more frugal consumer, retailers will continue to push value
this season," continued Sievers.

* Overall same store sales in August showed a slight uptick, the first in the
last 6 months. NOTE: Wal-Mart no longer reports out monthly same store sales and
is not reflected in these numbers.
* Back to school sales (the second largest retail "season" next to holiday) have
been lackluster despite sales tax holidays and do not bode well for holiday
sales.

Consumer confidence

* "Consumers are more confident than they were a year ago, but this confidence
is clearly fragile. We expect the impact of improved consumer confidence to be
trumped by basic access to funds," commented Sievers.

Housing market

* "We see pent up demand for housing as a mixed bag. The end of the $8,000
credit in December for new home buyers will likely create a rush of purchases
and help increase spending in areas like home improvement but could pull funds
away from other discretionary spending," commented Lavieri.

* Sales of previously owned single-family homes were up 7.2% in July 2009
compared with June and up 5% from July 2008.
* The lowest (relative) home prices in decades might finally be enough to incent
consumers to make a move; experts expect the end of the home tax credit to
create a rush towards new home purchases at year end.

Cash for Clunkers (Appliances)

* "Government incentives being discussed to buy appliances will certainly impact
holiday sales. However, lack of a consistent implementation approach as plans
are being administered state by state will likely limit the program`s impact,"
commented Hanna Hamburger, Director in the Consumer Product and Retail Practice
at Archstone Consulting.

* Appliances: $300M set aside for the program; rebates will be issued that can
be used to cover everything from refrigerators to furnaces and air conditioners.
Effective dates and programs will vary by state.

Foreign Investment

* "Decreased spending worldwide is an extension of the same trends from last
year as recession has taken a toll globally," commented Lavieri. "Foreign
consumers who drove significant Holiday sales in 2006 and 2007 will not flock to
the U.S. and shop this Holiday season in spite of a weak U.S. dollar."

Stock Market

* "The rising stock market should increase personal wealth, which will have a
positive effect on holiday retail spending. Its impact will be muted, though, by
consumer de-leveraging and an on-going new conservatism in wealth management,"
commented Lavieri.

Stimulus Impact and 2010

* "Two factors will lead to some optimism as 2009 comes to a close - increased
overall economic growth is expected in 2010, along with the Government stimulus
program taking hold next year could lead to a few more jobs and more personal
wealth in 2010. However very little of the Government stimulus will make its way
to consumers` pocketbooks for this year`s holiday spending," commented Sievers.

* The government had paid out about $80.9 billion in stimulus funds as of Aug.
14. Most of the spending so far has been in four areas (according to CBO these
four are: Medicare health coverage for the poor; unemployment benefits; one-time
$250 payments to retirees; and grants to states for education and other
government expenses).

Notes on Methodology and Analysis

For 2009, Archstone Consulting continued to rely on its proprietary, predictive
model using a comprehensive list of factors. These include monthly disposable
income, unemployment rate, consumer price index, price index for oil, wages,
housing market, and retail inventory levels. Additional research on consumer
credit, savings rates, consumer confidence, impact of government stimulus
programs, and foreign investment, was also factored into this year`s report.

Significant analytical and research contributions to the assessment were made by
Archstone Consulting Director, Hanna Hamburger and Associates, Sam Snyder and
Julie Bonne.

The information provided above is provided by Archstone Consulting solely for
informational purposes. In addition, the statements above speak as of the date
of this release. Factors could arise after this date that could affect the
outcomes and forecasts set forth above. Archstone Consulting shall have no
liability to any party for any action taken or not taken, or results obtained,
in reliance of this information

About Archstone Consulting

Archstone Consulting is a leading Strategy and Change, Operations and CFO
Advisory management consulting firm, specializing in the consumer products,
retail, life sciences and general manufacturing industries. Archstone Consulting
helps companies restructure and reduce their costs, while improving their
business processes and operations. Headquartered in Stamford, Connecticut,
Archstone Consulting has offices in Amsterdam, Chicago, New York and San
Francisco. For additional information, please visit us at
www.archstoneconsulting.com.

Archstone Consulting
David A. Schutzman, 203-940-8221
Chief Marketing Officer

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