The National Retail Federation is forecasting that 2015 holiday sales will increase 3.7 percent to $630.5 billion, in what’s expected to be another challenging and promotionally frenzied season.
While the predicted 3.7 percent gain is significantly higher than the 10-year average of 2.5 percent, it’s a decline from the holiday sales gain in 2014 of 4.1 percent. NRF officials cited slower job growth, deflation, consumer concerns over Middle East conflicts and global economic issues, the presidential campaign, higher rent and health-care costs, and shifts in spending habits toward big ticket items and services, as deterrents to holiday spending. Those factors are somewhat offset by lower prices at gas pumps.
“It just continues to be a much more competitive environment for retailing,” NRF chief economist Jack Kleinhenz told WWD. With deflation running at about 2 percent, “there’s no pricing power” for retailers, Kleinhenz added.
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“The underpinning for growth is more jobs,” Kleinhenz said. “If you get more jobs you get more spending power, but job growth in the first nine months has been on average lower than 2014. We are creating jobs but not as many as 2014.”
Kleinhenz said last year, an average of about 232,000 private sector jobs were created monthly, while this year it’s down to 184,000. “The economy is going forward but the propulsion is less than last year.”
Asked about the consumer mood, Kleinhenz said it’s hard to gauge but he detects “a sort of anxiety, nervousness over a variety of issues, from the war in Syria and conflicts in other areas in the Middle East, the political process in the U.S. and the budget battle which is yet to be decided.
“Similar to last year, in the sense we’re coming off a rather disappointing first half, this holiday season brings to light several crosscurrents that still exist for American households,” Kleinhenz said.
Holiday sales are expected to represent approximately 19 percent of the retail industry’s annual sales of $3.2 trillion, the NRF said. Additionally, the NRF is forecasting online sales to increase between 6 and 8 percent to as much as $105 billion.
The NRF considers holiday sales to be those in November and December and excludes restaurant, auto and gas sales. The association’s holiday sales forecast is based on an economic model using several indicators including consumer credit, disposable personal income and previous monthly retail sales releases.
Said NRF president and chief executive officer Matthew Shay: “With several months of solid retail sales behind us, we’re heading into the all-important holiday season fully expecting to see healthy growth. However, while economic indicators have improved in several areas, Americans remain somewhat torn between their desire and their ability to spend; the fact remains consumers still have the weight of the economy on their minds, further explaining the complex retail spending environment we are seeing right now. We expect families to spend prudently and deliberately, though still less constrained than we’ve seen in recent years.
“Potential disruptions from yet another government shutdown in mid-December and a slower pace of job creation and income growth are just a few key factors that will impact holiday shoppers’ spending this year,” continued Shay. “Price, value and even timing will all play a role in how, when, where and why people shop over the holiday season. Retailers will be competitive not only on price, but on digital initiatives, store hours, product offerings and much more.”
According to NRF, retailers are expected to hire between 700,000 and 750,000 seasonal workers this holiday season, in line with last year’s 714,000 new holiday positions.