By Thomas J. Ryan
Led by digital, but helped by an improving job market, sales are expected to come in solid to strong this holiday-selling season, according to a round-up of the latest forecasts.
The National Retail Federation (NRF) predicted sales in November and December (excluding auto, gas and restaurant sales) will expand 3.6 percent to $655.8 billion — significantly higher than the 10-year average of 2.5 percent and above the seven-year average of 3.4 percent since recovery began in 2009. Holiday sales in 2015 increased 3.2 percent over the previous year, while digital sales are expected to improve between 7 percent and 10 percent to as much as $117 billion.
“This year hasn’t been perfect, starting with a long summer and unseasonably warm fall, but our forecast reflects the very realistic steady momentum of the economy and industry expectations,” NRF President and CEO Matthew Shay said. “We remain optimistic that the pace of economic activity will pick up in the near term.”
“Consumers have seen steady job and income gains throughout the year, resulting in continued confidence and the greater use of credit, which bodes well for more spending throughout the holiday season,” NRF Chief Economist Jack Kleinhenz added. “Increased geopolitical uncertainty, the presidential election outcome and unseasonably warm weather are the main issues at play with the greatest potential to shake consumer confidence and impact shopping patterns.”
“However, the economic spending power of the consumer is resilient and it should never be underestimated,” continued Kleinhenz.
The International Council of Shopping Centers (ICSC) said it expects holiday sales, also covering November and December, to climb 3.3 percent year over year at physical stores this holiday season, up from its measure of a 2.2 percent increase in 2015.
The ICSC also found that while e-commerce will grow, 91 percent of holiday shoppers planned to spend at physical stores and many online activities will support those sales in physical locations. 85 percent of holiday shoppers indicated they will research online before making holiday purchases in-store. 39 percent planned to utilize click and collect, up from 32 percent in 2015. And furthermore, 83 percent expect to make additional purchases in-store when picking up their online order.
“We continue to see positive consumer-spending intentions ahead of the holiday season, with an emphasis on shopping in physical stores,” said Tom McGee, president and CEO of the ICSC. “Throughout 2016, consumers have demonstrated a tendency to shop across both digital and physical retail. Even shoppers who purchase online favor retailers with a physical presence, and an increasing number of consumers are buying online and collecting in stores. Consumer intentions show that this digital/physical convergence will be critical for the health of the industry as we close out the year.”
Deloitte predicts sales from November through January will rise 3.6 percent to 4 percent. The consultancy expects a 17 to 19 percent gain in e-commerce sales.
Daniel Bachman, Deloitte’s senior U.S. economist, said sales should get a boost by improving economic fundamentals, marked by a stronger labor market and elevated consumer confidence.
“Additionally, households have been drawing down their savings, and therefore spending has been healthier than would normally be expected given the rate of income growth,” said Bachman. “While attention toward presidential elections may be a temporary distraction in the early part of the holiday shopping season, it should not have a negative impact on sales, and retailers may benefit from a pickup in post-election consumer spending.”