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Holiday sales outlook

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NEW YORK — Retailers can anticipate a merry holiday season, with seasonal sales on the rise at least 5% from last year, according to a recent report from accounting firm Deloitte. Deloitte’s retail and distribution practice predicted sales from November through January (seasonally adjusted and excluding motor vehicles and gasoline) topping $1.1 trillion.

Comparable retail sales between November 2017 and January 2018 totaled $1.05 trillion, representing a year-on-year increase of 5%, Deloitte says, citing Commerce Department data.

The report saw a big bump of between 17% and 22% in digital sales during the period.

“The anticipated growth in holiday sales is likely because of solid disposable personal income growth, which we expect will be in the 5% to 5.4% range. That is above last year’s 4.7%,” said Daniel Bachman, Deloitte’s U.S. economic forecaster.

A healthy job market, elevated readings of consumer confidence and a “stable” personal savings rate of around 7% are also factors in Deloitte’s optimistic forecast. Risk factors identified by Deloitte include a stock market selloff and a move by policy makers at the Federal Reserve to tighten credit via an interest rate hike.

“Consumer sentiment and spending indicators provide a healthy outlook for retailers across channels, with strong expectations for store-based and online retailers,” said Rod Sides, vice chairman of Deloitte and its U.S. retail and distribution sector leader.

“We’ve seen retailers continue to advance their approaches to shipping, delivery, in-store experiences and tech-enabled commerce. That can include things like showrooms, interactive displays that replace sorting through racks with simple, easy selections or Web-based visualization that lets people get a feel for style, fit and appearance from apparel to home decor,” Sides said. “Voice-enabled shopping and shortened delivery times may also accelerate the competition around fast and easy purchasing options. The leading retailers this holiday season could be the ones who are able to strike the right balance between innovation, experience and value that best engages the consumer and stands out in a busy season.”

Coresight Research’s numbers show that despite a substantial number of store closures this year, 2018 is shaping up to be a bumper year for U.S. retail, with the sector growing very strongly, per the U.S. Census Bureau, and with even long-struggling legacy retailers turning in better-than-expected top-line figures.

“We are optimistic about the prospects for holiday sales this year and forecast year-over-year growth of 4% for November and December total retail sales. This will take total holiday retail sales to $720 billion from $692 billion last year,” said analyst Albert Chan, who heads the Hong Kong office at Coresight Research.

“Our estimated growth projection represents a slowing from 4.5% retail sales growth so far this year (through July). This anticipated slowdown arises from the demanding comparatives from holiday 2017, when November and December sales were up 5.5% in total, with November sales up by a very strong 6.7%, per the U.S. Census Bureau.”

He says Coresight’s estimate is well above the 2.8% average seen over the last 10 years. That 10-year average includes the global financial crisis and is based on data from the National Retail Federation.

Chan explained that the holiday selling season is extended because Christmas falls on a Tuesday this year versus a Monday in 2017. He added that Chanukah falls earlier in December, from sundown December 2 through sundown December 10, and this will support a strong start to the holiday shopping season. An earlier Chanukah will shift shopping into November.

“We expect U.S. holiday retail spending to increase by 4% in 2018, as several positive data points suggest a healthy shopping season this year. The macroeconomic environment features a lower unemployment rate, stronger housing prices, wage gains and stable consumer sentiment, all amid benign inflation.”

He said that the barrier to stronger total year-over-year growth will be the demanding comparatives from the strong 2017 holiday season. Total online retail sales look set to increase by around 16% year over year. “We expect e-commerce to account for almost 16% of all retail sales and around one in every five dollars spent across nonfood retail.”


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