With the stock market at record highs and the prospect of tax reform nigh, consumers are loosening their purse strings, according to a flurry of research reports predicting widespread healthy holiday sales.

This week so far, Customer Growth Partners forecast that U.S. holiday sales will reach $662.8 billion, rising 4.3 percent above last year’s actual total of $635.4 billion. Brand Keys Inc. predicted that the average household will spend $936 during the holiday stretch, or 4 percent more than they did last year.

Early in October, the National Retail Federation forecast retail sales to increase between 3.6 percent and 4 percent in November and December, with sales totaling between $678.75 billion and $682 billion, compared to last year’s $655.8 billion.

Joining the chorus was the International Council of Shopping Centers, predicting a 3.8 percent increase in holiday spending. But PwC was most bullish, forecasting a 6 percent gain in holiday sales, though that forecast included travel and entertainment as well as gifts.

“After a slow Q1, up only 2.3 percent year-to-date, retail spending is gaining speed with each passing month, now doubling its growth pace from early this year,” said Craig Johnson, president of Customer Growth Partners, a consulting and research firm serving retailers. “Holiday may not reach the peak 6 percent growth of the [mid-Aughts] bubble years, but 4.3 percent is a healthy pace, well above the 3.7 percent consensus, and based on the latest data, could even approach 5 percent. This year’s holiday may well mark a turning point not just for retail, but for overall consumer spending, which drives 70 percent of the economy.”

“Generally good economic news has consumers signaling a 4 percent increase in their holiday spend this year to an average of $936 per household,” said Robert Passikoff, founder and president of Brand Keys, a brand loyalty and customer engagement research consultant.

Passikoff believes consumers will shop earlier this year. “Retailers have recognized shifts in the consumer shopping paradigm, and will again try to capitalize on them by kicking off Black Friday-like sales even earlier than in previous years,” Passikoff said.

He said the holiday represents nearly 25 percent of the retail industry’s total sales and will be spread out over a four month-plus period even though the holiday season is traditionally defined as the 61 days of November and December. “It may work that way on the calendar, but not in successful retailers’ marketing strategies,” said Passikoff.

According to Customer Growth Partners, home furnishings retailers, superstores and warehouse clubs, Costco, Wal-Mart, online sites such as Wayfair, and food and beverage will be among the best performers for holiday.

“With a growing ‘wealth effect’ due to stock market gains, luxury stores will enjoy a happy holiday after two years of coal in their silk stockings,” Johnson observed.

However, sporting goods, toys and department stores will not perform as well. Traditional malls, where department stores are heavily concentrated, now account for barely 15 percent of total retail sales, down from 35 percent a generation ago, according to CGP.

“Total department store sales will decline sharply, as the over-capacitied sector belatedly downsizes by hundreds of stores from last year,” said Johnson.

He sees department stores dropping 3.9 percent, though that represents “a sequential improvement from last year, as the mall traffic woes ease, and as the stores ramp up their online sales. Apparel stores will struggle with only 1.8 percent growth, although that represents an acceleration from dreadful 2017 year-to-date growth of only 0.5 percent.”

CGP’s forecast is based on surveys conducted by its 18 researchers covering 90 mall and off-mall shopping venues, data from retailers and consumer research. The forecast covers all Census Bureau retail sectors except restaurants, autos and gasoline/oil.

load comments
blog comments powered by Disqus