This story first appeared in the October 26, 2016 issue of WWD. Subscribe Today.
As the political rivals make their final push to Election Day on Nov. 8, trading rhetorical blows, slinging mud and trying to cajole the electorate into voting for them, they’re clogging airways and social media feeds. That has them gobbling up the attention span of a citizenry already overwrought and not lacking things to occupy their mind.
That both candidates are so unpopular and that this presidential campaign has been so polarizing can only feed into the underlying anxiety felt by consumers caught in the crosswinds of generational, technological and social change.
The anger tied to everything from “locker room talk” to leaked e-mails to the nationalist impulse and racial and socioeconomic divides in society can’t help retail.
But it doesn’t seemed primed to hurt all that much either — even though experts are girding themselves for retail executives to point to the election as a quadrennial bogeyman if sales falter.
“Right around the election, that first week of November, we always see a decline in traffic,” said Shelley Kohan, vice president of retail consulting at analytics firm RetailNext. “There’s a lot of interest obviously in the presidential election and it’s a bit of a distraction.”
Kohan projected that store traffic in November would be down 11 percent, with the first week providing most of the drag, marking a deceleration from the 7.6 percent decline seen last year. Traffic has been slowing in stores as shoppers buy more online and focus their attention elsewhere.
RetailNext commissioned a Harris Poll that found 23 percent of those who plan to buy gifts this holiday season would spend less on holiday shopping if Trump were elected, while 21 percent would spend less if Clinton won.
Retailers have generally noted the possible impact of the election and looked beyond it quickly.
Art Peck, chief executive officer of Gap Inc., told investors in September: “We see a strong consumer environment out there….I think the election here in the United States is a level of uncertainty that’s probably unsettling consumers right now. So I would say I’m [somewhat positive] about the back half, but we’re still planning on being able to do business in a tough environment.”
Late October and early November is something of an in-between time for retail, beyond the back-to-school season, but before holiday gets into full swing.
And this year, that slow period is being made even slower by what Noam Paransky, a director in AlixPartners’ retail practice, described as the “pre-election funk.”
It would appear to be a temporary condition.
“Despite the increased rhetoric associated with this election cycle, we do expect the consumer to bounce back like they have historically post election,” Paransky said.
September and October sales before the 2004 election between George W. Bush and John Kerry slowed to growth of 4.9 percent, down from the 6.4 percent run rate earlier that year, but the pace picked back up to 6 percent for November and December, according to AlixPartners. In 2012, prior to President Obama’s reelection, sales growth slowed to 3.1 percent right before the election, down from 3.9 percent, but picked back up to 3.4 percent. (When Obama was elected in 2008, the already broiling financial crisis sent sales reeling).
This year, sales growth slowed to 2.8 percent in September, down from 3.5 percent earlier in the year.
Paransky said the postelection bounce backs have generally restored retail momentum, even if they haven’t helped recoup all of the sales lost during the September-October lull.
Although it’s anxiety that tends to make the headlines, the preelection slowdown could be more directly tied to advertising. Election season is an expensive time to buy ads to drive store traffic, although political media buys are down this year, with Trump replying more on Twitter and free press coverage to get his message out.
“Retailers haven’t planned a lot of media in the period because it was expensive to buy it up front,” Paransky said.
That leaves shopping on the sidelines of the ever-evolving national conversation, which is expected to return to consumers’ front-of-mind for Black Friday and the cyber rush that weekend. The overall outlook for the holidays is generally good, with sales seen bouncing back from a tough season this year. AlixPartners is projecting a sales gain of 3.3 to 4 percent, while the National Retail Federation has a 3.4 increase penciled in.
Paransky emphasized the importance of a certain “critical mass” in driving consumer behavior.
“The tonnage of promotional vehicles and media touch points around shopping and promotions generate the idea that it’s time to shop,” he said of the shopping push at the start of the holiday season. “That has a very powerful effect on the consumer psyche.”
While the ultimate impact of the election on shopping is expected to be transient, the campaign certainly has people feeling more than a little angry, distrustful and on edge. A national survey by Bankrate found that three in five Americans see the outcome of the election as the “biggest near-term threat to the economy,” far ahead of worries over terrorism, struggling overseas economies, a decline in the stock market and a possible increase in interest rates.
In the end, though, the president has little direct control over the economy in the near term and over the longer run can at best help shape an environment that’s conducive to growth. For now, at least, the consumer economy seems primed for more of the same — a kind of modest growth that’s enough for most retailers to limp along as they try to figure out how to take advantage of the opportunities and meet the challenges of e-commerce.
Greg Portell, lead partner in the consumer and retail practice of A.T. Kearney, said people’s spending after the election would be guided by their own economic circumstances, which won’t be that much different than they were before the vote.
“You can be captured and entranced by the political reality for a while, the reality blood sport of it, but after the election is over, you have to wonder how much people are really going to care about the rhetoric side of it and they’re going to be more concerned about their personal experience,” Portell said.
“It all comes back to jobs and people are employed,” he said. (The unemployment rate stands at 5 percent, down from 10 percent at its weakest point during the Great Recession).
“That takes a lot of the angst off the political uncertainty from a retail spending standpoint,” he said. “There are some blips here and there, but consumer confidence is pretty high relative to where it’s been in the past five years. Consumers are not really viewing this as a reason to change spending habits.”
Portell agrees that the end of the election season dovetails into the beginning of the holiday season, which should refocus shoppers.
“People are going to quickly shift from their excitement or disappointment after the election into what new PlayStation game we should get,” he said.