Uniqlo's fall/winter 2017 LifeWear collection was previewed in New York.

Low unemployment levels along with higher household income growth is boosting consumer confidence and will drive U.S. holiday sales past the trillion-dollar mark this season, according to eMarketer in the firm’s latest forecast report.

And the bulk of the sales will be driven by transactions in physical stores.

The company measures holiday sales from Nov. 1 through the end of December. “This holiday season, total retail sales in the U.S. will increase 5.8 percent to $1.002 trillion,” eMarketer researchers said in their report. “This is the first time holiday sales will cross the $1 trillion mark, and 2018 shows the strongest growth since 2011. Spending momentum will get an added boost from a favorable holiday calendar that features the maximum 32 days between Thanksgiving and Christmas.”

Drilling down into the fashion apparel segment, a separate investment research note from Jane Hali & Associates LLC cited outerwear, denim and streetwear as top performers with outerwear being the “It” category this holiday season.

In the eMarketer report, the company said although some “economic headwinds are finally beginning to form after mostly blue skies in 2018, we expect their effects to be muted until after the holidays. Retailers have built up inventories for products affected by tariffs on imports from China and are not expected to pass on notable price increases to consumers until 2019.”

Authors of the report expect brick-and-mortar sales this year to rise 4.4 percent to $878.38 billion, which is above the $863 billion estimate that forecast earlier this year by the company. “Brick-and-mortar still represents the majority [87.7 percent] of holiday sales, but its share has steadily declined,” eMarketer noted.

The report is pegging online holiday season to gain 16.6 percent to $123.73 billion, which is 12.3 percent of all holiday sales this year.

Andrew Lipsman, principal analyst at eMarketer, said while e-commerce will continue to see strong double-digit gains, “brick-and-mortar retail should be a particular bright spot this holiday season. Not every brick-and-mortar retailer is thriving, and several have shut their doors this year, but others are really capitalizing on the strong consumer economy. Retailers are luring in shoppers with remodeled stores, streamlined checkout and options to buy online, pick up in store.”

Cindy Liu, forecasting analyst at eMarketer, said companies are facing a “battle for e-commerce market share. We should expect more promotions and perks like free and fast shipping, as retailers compete against Amazon.”

In the report from Jane Hali & Associates LLC, principal of the firm Jane Hali said this season’s top category drivers will be home goods, electronics and beauty. In apparel, activewear, streetwear, denim and outerwear will be fashion’s stars along with footwear (non-performance), boots and sweaters. She noted that “Millennials are not frivolous, they will continue to purchase in those areas that are useful and experiential.”

With streetwear, Hali said it is “a style, among young men and women, that continues to grow.” Hoodies, jeans, caps and T-shirts are core. In denim, Hali sees wide cropped, colored and contrast details are positioned for the strongest sales along with jeans featuring hem detailing.

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