By David Moin
with contributions from Vicki M. Young
 on November 21, 2018

Stock market declines haven’t dampened retailers’ optimism for the holiday season.

Momentum seen through the fall continues. Promotions are on par with last year. Inventories are mostly in line. Consumer sentiment is holding up, and nobody is pushing the panic button.

Industry experts are sticking to their forecasts for mid-single-digit sales gains for the November-to-December holiday season, and expect certain retailers, such as Macy’s, Kohl’s and Penney’s to pick up from Sears, Kmart, Bon-Ton and Toys ‘R’ Us store closures.

While cold weather inventories are high due to the extended warm weather, sub-freezing temperatures move in this week, bringing a chill to Thanksgiving Day and Black Friday and potentially spurring cold weather sales. Larger concerns loom over whether retailers provide “frictionless” and convenient shopping experiences demanded by consumers. Retailers must have the right products available when and how people want to buy and receive them and must make the shopping experience fast and easy with good service.

“We’ve got a good consumer environment in the fourth quarter. Consumer confidence is high. Spending is currently strong and expected to be strong,” Jeff Gennette, Macy’s chairman and chief executive officer, told WWD last week, right after the company reported solid third-quarter results and raised guidance, forecasting comparable sales for 2018 up 2.3 percent to 2.5 percent from previous guidance of 2.1 percent to 2.5 percent and diluted earnings per share at $4.10 to $4.30, from $3.95 to $4.15.

“We feel optimistic about the holiday season,” Nordstrom co-president Blake Nordstrom said during a conference call. “We worked hard to take friction out of the customer experience. We have managed inventories well throughout the year.”

“We’re feeling good. We are trending high single digits ahead of last year,” said Mary Ellen Coyne, ceo of J.McLaughlin. “There is a lot going on in the economic climate and people are concerned about stock, but classic brands like J.McLaughlin are what people look for in times of uncertainty.”

Kevin McLaughlin, cofounder of J.McLaughlin and chief creative officer, said that holiday merchandise is already being well received. “We’ve had a good November so far. We made a big push into faux fur and it turned out to be the right move.” Animal prints and glitter have also performed, while sweaters and cold weather items will drive the business going forward, McLaughlin added. “It’s very difficult to project the season but if you can execute very well on the fundamentals — customer service, how the stores looks, if you make sure the assortment is correct, and associates are geared up, that’s the high ground.”

“Whether it’s Best Buy, Walmart or Kohl’s, it’s really not about the stock. It’s about whether they have the product in stock and whether the store helps me get through my shopping list, conveniently and at a good price,” said Craig Johnson, president of Customer Growth Partners.

“When the stock market goes up or down, there’s a wealth effect but it’s a secondary factor, mainly affecting luxury or near luxury sales and outweighed by Wall Street bonuses which will be pretty good this year. Nothing that I predicted has changed. Total sales in November and December will be up 5.1 percent,  just shy of last year’s of 5.3 percent. That’s very healthy and the best two-year stretch since the mid-2000s.”

Frank Layo, managing director at Kurt Salmon, which is part of Accenture Strategy, said his firm’s retail clients are expecting a good holiday season, but keeping an eye on which retailers begin to “ratchet up” the discounting earlier in the season to try drive sales.

“This is going to be a near-record cold Thanksgiving in New York City and much of the Northeast which will bleed into Black Friday,” said Evan Gold, Plananalytics, executive vice president, global partnerships and alliances. “Expect to see lots of bundled-up parade watchers. The weekend as a whole will be favorable for cold-weather apparel across much of the country. Travelers and consumers throughout the East will enjoy mostly dry conditions over the holiday and through the weekend, helping to minimize travel issues and support traffic into retailers and restaurants.  An active storm track will lead to wetter conditions for much of the western U.S. over the holiday weekend, aiding the ongoing battle against the wildfires. The system tracks into the central U.S. by Black Friday and brings scattered showers to portions of the Northeast over the weekend.”

Gabriella Santaniello, founder of retail research firm A Line Partners, said, “Overall, inventories have been appropriately built for holiday,” noting that Black Friday, while still a major volume day, isn’t as big in the stores due to accelerating online shopping and earlier promoting online. She said some recent strong sellers have been Dior and Hollister logoed merchandise, Lululemon, Ugg Australia, Vans and Coach. “Statement logos are making a huge comeback,” she said.

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