The NRF (National Retailer Federation) became the latest organization predicting robust sales for the holiday season. Gains are expected to be helped by low unemployment, rising stock markets and another year of double-digit online spending gains.
Gains are generally expected to be slightly higher or match 2016’s holiday results. Retail sales between November 2016 and January 2017 (seasonally adjusted and excluding automotive and gasoline) grew 3.6 percent and totaled $1.0 trillion, according to the U.S. Commerce Department.
Below is a wrap-up of several of the holiday 2017 forecasts:
NRF Forecasts Holiday Sales To Increase Between 3.6 And 4 Percent
NRF expects holiday retail sales in November and December – excluding automobiles, gasoline and restaurants – to increase between 3.6 and 4 percent for a total of $678.75 billion to $682 billion, up from $655.8 billion last year.
“Our forecast reflects the very realistic steady momentum of the economy and overall strength of the industry,” NRF President and CEO Matthew Shay said. “Although this year hasn’t been perfect, especially with the recent devastating hurricanes, we believe that a longer shopping season and strong consumer confidence will deliver retailers a strong holiday season.”
Christmas falls 32 days after Thanksgiving this year, one day more than last year, and is on a Monday instead of Sunday, giving consumers an extra weekend day to complete their shopping.
This year’s forecast would meet or exceed last year’s growth of 3.6 percent and the five-year average of 3.5 percent. While recent hurricanes are not expected to have a significant long-term effect on the economy, NRF is issuing this year’s forecast as a range rather than the usual fixed percentage because the impact of the storms on economic indicators has made it difficult to make a more precise forecast.
“Consumers continue to do the heavy lifting in supporting our economy, and all the fundamentals are aligned for them to continue doing so during the holidays,” NRF Chief Economist Jack Kleinhenz said. “The combination of job creation, improved wages, tame inflation and an increase in net worth all provide the capacity and the confidence to spend.”
NRF’s forecast is based on an economic model using several indicators including consumer credit, disposable personal income and previous monthly retail sales. The overall number includes the non-store category (direct-to-consumer, kiosks and online sales).
Deloitte Expects Holiday Sales To Increase 4 To 4.5 Percent
Retail holiday sales should rise a healthy 4 to 4.5 percent over last year’s shopping season, according to Deloitte’s annual retail holiday sales forecast.
Deloitte’s retail and distribution practice expects total holiday sales (seasonally adjusted and excluding motor vehicles and gasoline) to reach $1.04 trillion to $1.05 trillion between November and January. Additionally, Deloitte forecasts an 18 to 21 percent increase in e-commerce sales in 2017 compared with 2016. E-commerce sales are expected to reach $111 billion to $114 billion during the 2017 holiday season.
“The projected uptick in holiday sales ties to four primary factors affecting consumer spending, starting with anticipated strong personal income growth,” said Daniel Bachman, Deloitte’s senior U.S. economist. “Last year, disposable personal income grew 2 percent over the year to the holiday period, and we may see that rise to a range of 3.8 to 4.2 percent this season. Consumer confidence remains elevated, the labor market is strong and the personal savings rate should remain stable at its current low level.”
While fundamentals remain positive, Deloitte’s economist also cited potential uncertainties that could affect income growth and bring the forecast in at the lower end of the range, such as an increase in the savings rate that would cause spending to expand more slowly. The threat of a government debt ceiling crisis – which has loomed over prior holiday seasons – could also cut employment and income growth. The impact of the unusually active hurricane season remains too early to project, as it could depress spending or increase it, particularly in the home improvement sector, due to rebuilding activity.
“Sentiment and spending indicators are firing on all cylinders, but the question is: How will retailers respond given the profound disruption across the industry?” said Rod Sides, vice chairman, Deloitte LLP and U.S. retail and distribution sector leader. “The good news is retail is thriving, and it is the proliferation of new, niche retailers that is resulting in share constantly changing hands. Consumers have unlimited alternatives and often bounce between brands, touchpoints and influencers, making it more difficult for retailers to attract shoppers without some level of customization. These disruptive factors are likely to combine to create a highly competitive and promotional holiday season. Retailers should modify their assumptions about what drives traffic, engagement and holiday sales growth, and realign around customer experience, creating relevant, emotional and inspirational connections that go beyond just product, price and assortment.”
AlixPartners Sees Holiday Sales Rising 3.5 percent To 4.4 percent
AlixPartners anticipates an increase in sales revenue for retailers for the November-through-January period of 3.5 percent to 4.4 percent, compared with 2016 holiday-season sales.
Joel Bines, co-head of the AlixPartners’ retail practice and a managing director at the firm, said: “The so-called ‘Retail Apocalypse’ may not be nigh after all. Based on our unique and historically highly-accurate methodology, we see a fairly healthy holiday season for retail. However, there definitely will be losers as well as winners this holiday season. And the overriding question is whether individual retailers can take advantage of the period ahead and redouble their efforts to deal, both strategically and tactically, with everything from the rise of online shopping to the fact that many younger consumers today prefer spending their money on experiences rather than on tangible products.”
The AlixPartners’ forecast methodology is based on the premise that year-to-date retail sales data though the end of the back-to-school season has historically proved to be perhaps the best gauge of what U.S. consumers will spend during the holiday season. This is buttressed by the fact that over the past seven years, year-to-date sales through the back-to-school season have accounted for 66.1 percent to 66.4 percent of retail sales annually, with holiday sales accounting for 16.9 percent to 17.0 percent.
ICSC Forecasts 3.8 percent Year-Over-Year Holiday Growth
The International Council of Shopping Centers (ICSC) forecasts a 3.8 percent year-over-year growth in retail sales for this holiday season. Additionally, ICSC released its Holiday Shopping Intentions Survey showing that consumers expect to spend on average $728.40 on gifts and other holiday related items.
Consumers continue to demonstrate their preference for making purchases through a variety of channels including in the store, online and click and collect. In fact, 96 percent of shoppers plan to make a purchase from a retailer who has both a physical and an online presence, with 91 percent of shoppers buying at physical locations.
Holiday shoppers will take advantage of omnichannel retailers with 40 percent of them buying online and picking up in-store; 81 percent of those shoppers plan to make additional purchases when collecting their item(s).
“Our annual Holiday Shopping Intentions findings demonstrate that consumers are very optimistic this holiday season and that physical retail remains a cornerstone of the holiday season,” said Tom McGee, president and CEO of the International Council of Shopping Centers. “The more agile retailers are in meeting consumers’ demands for the seamless convergence of physical and digital shopping, the more success they will see.”
Millennials will play an integral part in this holiday season with 92 percent planning to spend money in a physical store. On average, this demographic plans to spend $554.40 on holiday gifts and related items and will mostly use their debit cards or pay cash (54 percent) when making those purchases.
More than any other age group, Millennials plan to take advantage of discounts on Black Friday (57 percent). Three-fourths of Millennials shoppers plan to spend online at retailers whose stores they also visited and 50 percent of them will buy online and pick up in-store.
“Millennials are by far the biggest disruptor right now. They not only want experience but they want convenience as well which we see in their intent to utilize both online and physical,” stated McGee. “The theory that they are a digital-only generation is simply not true; they want digital to be a part of their transaction rather than the entire transaction.”
While November and December remain the anticipated busiest shopping months, ICSC saw an uptick in the number of people planning to shop before Thanksgiving at 66 percent—with almost one third (27 percent) starting as early as August. The expected extension of the shopping season means the potential of more sales for retailers, as 46 percent of shoppers say they plan to spend more this holiday season.
Shoppers (85 percent of them) plan to research online prior to making purchases in-store. Three-quarters of holiday shoppers who have a mobile device will use it for shopping in a store to compare prices, get discounts and check availability. Nine out of 10 holiday shoppers expect to visit a retailer’s website or app to browse product information.
PwC Sees 6 Percent Hike In Holiday Spending
PwC expects most consumers (83 percent) are primed to spend as much or more this holiday as they did last year; the average of $1,189 per customer is 6 percent higher than last year. Those estimates include travel and entertainment.
PwC ‘s survey shows that shoppers with incomes less than $60,000 planned to spend just 0.3 percent more this holiday season, while those with household income above that plan to step up their spending by 5 percent. In the $100,000 to $149,900 income range, people plan to spend 15 percent more, and at more than $150,000 people said they’ll spend 8 percent more.
The overwhelming majority (88 percent) told PwC that they’ll shop in stores this holiday, but another great majority (84 percent) said they’ll shop online.
Forrester Sees 12 Percent Climb In Online Holiday Revenues
Online holiday retail sales will grow by 12 percent in 2017, accounting for over one-quarter of total U.S. e-commerce sales for the year, predicted Forrester.
According to Forrester’s 2017 Online Holiday Outlook report for the U.S., the total number of online holiday shoppers will increase 3 percent compared to last year, with consumers spending an average of $689 online — up 8 percent over 2016. Two out of five consumers plan on spending more online during this year’s holiday season than in 2016.
“In the U.S., retailers are carefully planning for maximum return throughout the scant four and a half weeks between Thanksgiving and December 25 this year,” writes Forrester analyst Fiona Swerdlow in the company’s U.S. Holiday 2017 Outlook report. “We’ll see marketing crescendos around Black Friday and Cyber Week again — but, as in recent years, retailers will start rolling out holiday campaigns much earlier in November.”
Photo courtesy Southlake Garden District