Hol­i­day sales pre­dic­tions for 2017 : US re­tail sales ex­pected to end the year on a high

US RE­TAIL SALES EX­PECTED TO END THE YEAR ON A HIGH

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As the hol­i­day sea­son nears, both re­tail­ers…

As the hol­i­day sea­son nears, both re­tail­ers and con­sumers have ex­pec­ta­tions… While the re­tailer looks at this sea­son as the big­gest sales op­por­tu­nity of the year, shop­pers look for deals and gift­ing ideas that are cur­rent and af­ford­able. Ac­cord­ing to early pre­dic­tion from Deloitte, hol­i­day sales could grow as much as 4.5 per cent, which would match re­sults in 2015 af­ter a rel­a­tively slow growth last year, wherein growth was only 3.6 per cent. Even AlixPart­ners, a con­sult­ing firm best known for its work in the turn­around space, has fore­casted re­tail sales to rise from

3.5 to 4.4 per cent this hol­i­day sea­son. The gen­eral ex­pec­ta­tions of bet­ter hol­i­day sales this year are based on in­creas­ing dis­pos­able per­sonal in­come and con­se­quent con­sumer con­fi­dence across the US. “Sen­ti­ment and spend­ing in­di­ca­tors are fir­ing on all cylin­ders, but the ques­tion is: How will re­tail­ers re­spond given the pro­found dis­rup­tion across the in­dus­try?” said Rod Sides, who heads up Deloitte’s Re­tail & Dis­tri­bu­tion prac­tice.

In­deed, the ques­tion be­ing asked by many in­dus­try watch­ers is whether re­tail­ers will be able to sat­isfy the shop­pers who are com­ing out af­ter a few bad months. “The over­rid­ing ques­tion is whether in­di­vid­ual re­tail­ers can take ad­van­tage of the pe­riod ahead and re­dou­ble their ef­forts to deal, both strate­gi­cally and tac­ti­cally, with ev­ery­thing from the rise of on­line shop­ping to the fact that many younger con­sumers to­day pre­fer spend­ing their money on ex­pe­ri­ences rather than on tan­gi­ble prod­ucts,” said Joel Bines, co-head of AlixPart­ners’ re­tail prac­tice about this year’s hol­i­day sea­son.

But not ev­ery re­tail re­search group is as up­beat about the sales this hol­i­day sea­son as since the start of the year, the US monthly con­sumer price in­dex has missed an­a­lysts’ es­ti­mates four times, ac­cord­ing to Thomson Reuters data. In September, The Na­tional Re­tail Federation (NRF) re­vised its re­tail growth pre­dic­tions to only be­tween 3.2 per cent and

3.8 per cent, down from 3.7 per cent to 4.2 per cent growth es­ti­mated in Fe­bru­ary. The in­dus­try group said weaker-than-ex­pected spend­ing in the first quar­ter along with de­cel­er­at­ing in­fla­tion also con­trib­uted to the re­vi­sion, but it did add that it ex­pects

strong sales heading into the fall and hol­i­day sea­sons.

Sig­nif­i­cantly, more re­cently, NRF has again re­vised its es­ti­ma­tions, an­nounc­ing that it ex­pects hol­i­day re­tail sales in Novem­ber and De­cem­ber – ex­clud­ing au­to­mo­biles, gaso­line and restau­rants – to in­crease be­tween 3.6 and 4 per cent for a to­tal of US $ 678.75 bil­lion to US $ 682 bil­lion, up from US $ 655.8 bil­lion last year. “Our fore­cast re­flects the very re­al­is­tic steady mo­men­tum of the econ­omy and over­all strength of the in­dus­try,” said NRF Pres­i­dent and CEO Matthew Shay. He added, “Al­though this year hasn’t been per­fect, espe­cially with the re­cent dev­as­tat­ing hur­ri­canes, we be­lieve that a longer shop­ping sea­son and strong con­sumer con­fi­dence will de­liver re­tail­ers a strong hol­i­day sea­son.”

Sig­nif­i­cantly, Christmas falls 32 days af­ter Thanks­giv­ing this year, one day more than last year, and is on a Mon­day in­stead of Sun­day, giv­ing con­sumers an ex­tra week­end day to com­plete their shop­ping. Last year, the emo­tional run up to the pres­i­den­tial elec­tions im­pacted the hol­i­day sea­son and the core hol­i­day sea­son be­gan early in 2016, with ma­jor Black Fri­day sales start­ing the week be­fore Thanks­giv­ing.

The on­line sea­son also ran closer to Christmas, with both con­sumers and re­tail­ers more con­fi­dent about the abil­ity to have prod­ucts shipped on time. The con­ver­gence be­tween phys­i­cal and on­line shop­ping con­tin­ued dur­ing the 2016 hol­i­day sea­son, with more ads driv­ing foot traf­fic and more on­line ser­vices en­hanc­ing the in-store ex­pe­ri­ence. This year too on­line shop­ping is ex­pected to dom­i­nate the buy­ing space.

E-com­merce has the edge…

As con­sumers con­tinue to spend more on­line due to the con­ve­nience, se­lec­tion, and value, pre­dic­tions for on­line sales is much higher than that ex­pected at brick and mor­tar stores. In its re­cent re­port, For­rester pre­dicts that US on­line hol­i­day sales will reach US $ 129 bil­lion in 2017. This rep­re­sents 12 per cent growth in hol­i­day sales over 2016. As per pre­dic­tions given by Deloitte, E-com­merce sales are ex­pected to in­crease 18 to 21 per cent dur­ing the 2017 hol­i­day sea­son, big­ger than last year which climbed 14.3 per cent in 2016.

How­ever, re­tail search mar­ket­ing firm, NetElixir says e-com­merce sales are in­creas­ing at a slower rate than pre­vi­ous hol­i­day sea­sons and based on nine years of ag­gre­gate data from mid-sized and large on­line re­tail­ers, NetElixir fore­casts this year’s hol­i­day e-com­merce sales will see a 10 per cent year-over-year growth rate, a slight drop com­pared to last year’s growth rate of 11 per cent. “This year, we have seen an over­all sales slow­down and re­tail drop with more store clos­ings,” claims NetElixir in its news re­lease.

Not ev­ery re­tailer is look­ing at tra­di­tional sea­sonal hir­ing…

Tar­get is one of the first re­tail­ers to an­nounce its hir­ing plans for the 2017 hol­i­day shop­ping sea­son. Ac­cord­ing to latest com­pany re­lease, the re­tail­ers plan to hire 1,00,000 work­ers for the 2017 hol­i­days, up 40 per cent from last year, a clear in­di­ca­tion that the re­tailer ex­pects sig­nif­i­cant growth in sales this year. How­ever, Wal­mart is re­defin­ing the hol­i­day hir­ing scene, an­nounc­ing that it won’t be hir­ing ad­di­tional staff for its stores this hol­i­day shop­ping sea­son, in­stead it will offer ex­tra hours to its cur­rent staff of 1.5 mil­lion em­ploy­ees in the US. In­dus­try watch­ers feel that now op­por­tu­ni­ties for tem­po­rary store jobs may be harder to get in com­ing years as re­tail­ers try to give their ex­ist­ing em­ploy­ees a chance to pad their pay checks.

Fur­ther, on­line shop­ping has been shift­ing hol­i­day jobs in re­cent years to re­tail­ers’ ful­fil­ment cen­tres and to ship­ping com­pa­nies such as FedEx and UPS. In fact, though Macy’s is hir­ing 80,000 sea­sonal work­ers this year, it is about 3,000 fewer than last year. One can­not over­look the fact that the re­tailer has closed many stores this year and is shift­ing more of those tem­po­rary staffers to e-com­merce po­si­tions. About 18,000 sea­sonal jobs will be in ful­fil­ment fa­cil­i­ties, and that num­ber rep­re­sents 20 per cent more peo­ple in those jobs than last year.

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