October 8, 2014
Retailers dreaming of a green Christmas
Retailers may have something to be cheery about this holiday season. According to a forecast by the National Retail Federation (NRF), sales for the last two months of the year are expected to climb 4.1 percent vs. the same year-ago period, a full percentage point higher increase than 2013 and the first time since 2011 that the number exceeded four percent.
Online sales are expected to continue to grow for the Christmas selling season despite highly publicized problems with deliveries last year. According to Shop.org, online sales will be between eight and 11 percent higher for the last two months of the year than 2013.
"Retailers could see a welcome boost in holiday shopping, giving some companies the shot in the arm they need after a volatile first half of the year and an uneventful summer," said Matthew Shay, president and CEO of NRF, in a statement. "While expectations for sales growth are upbeat, it goes without saying there still remains some uneasiness and anxiety among consumers when it comes to their purchase decisions."
While the jobs picture has brightened somewhat of late, with the national unemployment rate falling below six percent for the first time since 2008, the story isn’t completely positive. Many who have recently found work are employed in low wage jobs and pay raises for most others have been minimal. According to Mercer, a talent consulting firm, the average employee’s raise was 2.9 percent in 2014. Next year the number is projected to be three percent.
"Though we have only seen consumer income and spending moderately — and erratically — accelerate this year, we believe there is still room for optimism this holiday season," said Jack Kleinhenz, NRF chief economist. "In the grand scheme of things, consumers are in a much better place than they were this time last year, and the extra spending power could very well translate into solid holiday sales growth for retailers; however, shoppers will still be deliberate with their purchases, while hunting for hard-to-pass-up bargains."
Not everyone shares NRF’s optimism for the holiday season. Citing the same potential drags on consumer spending, a new survey by PwC US and Strategy& projects the average American household will cut holiday spending from $735 in 2013 to $684 this year.
"The upcoming holiday shopping season will look very similar to 2013 as shoppers remain cautious on the economy and are concerned about disposable income, the rising cost of living, and insufficient salary," said Steven Barr, PwC’s U.S. retail & consumer practice leader, in a statement. "The spending divide among shoppers is widening, creating two distinct groups that we are tracking — survivalists and selectionists — and retailers must cater to both segments."
- Optimism Shines as National Retail Federation Forecasts Holiday Sales to Increase 4.1% – National Retail Federation
- Unemployment rates fall for least educated – USA Today
- Pay raises for US employees continue to grow steadily, new Mercer study finds – Mercer
- Holiday Shopping Spend Forecasted to be Down in 2014 as Shoppers Remain Cautious, According to PwC US and Strategy& – PwC US/Strategy&/PR Newswire
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Recent Discussions
Discussion Questions
Are you optimistic or pessimistic about the prospects for the upcoming Christmas selling season? What will be the difference between success and failure during the last two months of the year?
Poll
Slightly optimistic. Longer holiday shopping season, last year was the shortest one in recent memory, and an improving economy and consumer confidence.
I am optimistic about 2014 Christmas sales. But while retailers are expecting a green Christmas there are still many factors that could possibly shade that optimism in the last two months of 2014: War, health scares, key statistical corrections, new layoffs, elections and fear. Those possibilities aside, American consumers want to spend money this year.
It’s as predictable as tomorrow’s sunrise that the NRF will issue an optimistic forecast for the holiday season. They are correct about some tailwinds (improving employment, lower gas prices), and consumer sentiment measures appear to be on the uptick, but there is no consistent trend yet. The economy needs to “raise all boats” before we can expect this kind of result.
As long as sales of electronics (other than the new iPhone) and apparel continue to be soft, it’s hard to see where the four percent increase is coming from. But there will be some clear winners: Stores like Costco with a strong existing trend, stores like Target with easier comps, companies who lost traffic last year due to weather, and retailers who execute their omni-channel logistics better than last year’s fiasco.
Dick has it right. Wage stagnation is real for many Americans, so the predicted increase in holiday spending would come from increased debt. Given the uncertainty around us (Ebola, ISIS, learning that the front door of the White House is unlocked) I’m not sure this is the right climate for consumer spending boosts.
Although the consumer sentiment will vary by region. As our international readers view this article, I’m thinking about the European economic climate being not as strong as the U.S., so I’d like to hear from some of those people for their perspectives. In the U.S., overall I am very optimistic for the holiday season. Again, this will vary in major metro areas, however major purchases like automobiles are up, so discretionary purchases should also respond favorably.
It will be interesting to see what retailers offer beyond deep price discounts, and more in the way of services and true benefits to attract shoppers and determine the potential for a successful season.
Leave it to Americans to put aside our troubles, as best we can, to do Christmas right. No matter what you celebrate, we all need a hall pass once a year and we use it!
Does this mean that we throw frugality out the window? Nope. But we find ways to balance out the spend.
Yes, I am optimistic, and with all that is going on in the world today, my two cents says that we all want something to be optimistic about!
I see online traffic this Christmas being huge compared to previous years and foot falls in stores going down again. The “I don’t have to go to stores” epiphany has fully hit home with consumers, which, IMO, will actually help sales in what used to be heavy traffic times in the bricks.
Now, finally, in the minds of the many, it’ll be easier to get what you want without having to actually go anywhere at all. This realization opens up to plus sales … at least when the macro economy is ok.
I am feeling slightly more optimistic this year. The Holiday season is a bit longer with Chanukah beginning mid December. It depends on more factors than shopping days. There should be more online shopping with pickups in the stores. That should lead to more impulse buying which is stronger this time of year.
I’d make a case for shopping as escapism as an essential coping mechanism for the American consumer, positively affecting the season’s performance. The public is bombarded with too many daily news stories of a dreary apocalyptic future. But in the time they’ve got left, they can still buy a new tablet, fill out the wardrobe, get a latte and fresh-baked Mrs. Fields chocolate chip cookie, and let the uncertainties of the future melt away at the mall.
For this reason, I’m optimistic and expect a promotions-fueled holiday season that falls a little short of the NRF estimates — short mostly because of the low total employment numbers. But I reserve the right to raise my forecast given the right combination of caffeine and sugar-laced goodies on my next visit to the mall.
I am cautiously optimistic about the upcoming holiday season. The difference between success and failure this holiday season will be effective pricing and the ability to create a sense of urgency. In order to get consumers to spend their hard earned dollars, retailers must use psychological pricing to position their products as a good deal that shoppers need to jump on.
Online retail should definitely see an increase this year because being in crowded stores and long lines gets tiring and consumers know that they have options for getting the same goods. Retailers will have to work harder to get orders out on time to avoid the blunders of last year and boost consumer trust and loyalty.
I am concerned, people. I am observing in the Midwest and it is not pretty out here in “fly-over” country. It may be fly over, and some locations, especially on the coasts may be okay, but the fly over area is pretty big and there are a LOT of areas where the economy locally is downright awful!
We keep hearing how great the economy is doing and how wonderfully everything continues to recover, but honestly there are a lot of places where that simply is not the truth.
Perhaps the coastal areas where things are better will be able to carry it?
Unclear, but I generally tend to the optimistic.
On the one hand, we have a slightly longer shopping season, cheaper gas and better employment rates. On the other, we have quite a few unpredictable factors that may hurt spending levels such as disease (Ebola), above normal precipitation levels for the US and Canada and war (ISIL), and the concern that much of consumers’ discretionary spending has already been allocated to the Apple iPhone 6, Watch and other recent Apple releases.
Hopefully, however, consumers will get a jump on online spending and avoid many of the issues we have ahead of us this year. And if online spending this year has grown as rapidly as research has shown, I am hopeful this will be the key to a successful holiday season for retailers. Either way, I can see it being a barometer for overall economic performance in 2015.
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Slightly optimistic. Longer holiday shopping season, last year was the shortest one in recent memory, and an improving economy and consumer confidence.
I am optimistic about 2014 Christmas sales. But while retailers are expecting a green Christmas there are still many factors that could possibly shade that optimism in the last two months of 2014: War, health scares, key statistical corrections, new layoffs, elections and fear. Those possibilities aside, American consumers want to spend money this year.
It’s as predictable as tomorrow’s sunrise that the NRF will issue an optimistic forecast for the holiday season. They are correct about some tailwinds (improving employment, lower gas prices), and consumer sentiment measures appear to be on the uptick, but there is no consistent trend yet. The economy needs to “raise all boats” before we can expect this kind of result.
As long as sales of electronics (other than the new iPhone) and apparel continue to be soft, it’s hard to see where the four percent increase is coming from. But there will be some clear winners: Stores like Costco with a strong existing trend, stores like Target with easier comps, companies who lost traffic last year due to weather, and retailers who execute their omni-channel logistics better than last year’s fiasco.
Dick has it right. Wage stagnation is real for many Americans, so the predicted increase in holiday spending would come from increased debt. Given the uncertainty around us (Ebola, ISIS, learning that the front door of the White House is unlocked) I’m not sure this is the right climate for consumer spending boosts.
Although the consumer sentiment will vary by region. As our international readers view this article, I’m thinking about the European economic climate being not as strong as the U.S., so I’d like to hear from some of those people for their perspectives. In the U.S., overall I am very optimistic for the holiday season. Again, this will vary in major metro areas, however major purchases like automobiles are up, so discretionary purchases should also respond favorably.
It will be interesting to see what retailers offer beyond deep price discounts, and more in the way of services and true benefits to attract shoppers and determine the potential for a successful season.
Leave it to Americans to put aside our troubles, as best we can, to do Christmas right. No matter what you celebrate, we all need a hall pass once a year and we use it!
Does this mean that we throw frugality out the window? Nope. But we find ways to balance out the spend.
Yes, I am optimistic, and with all that is going on in the world today, my two cents says that we all want something to be optimistic about!
I see online traffic this Christmas being huge compared to previous years and foot falls in stores going down again. The “I don’t have to go to stores” epiphany has fully hit home with consumers, which, IMO, will actually help sales in what used to be heavy traffic times in the bricks.
Now, finally, in the minds of the many, it’ll be easier to get what you want without having to actually go anywhere at all. This realization opens up to plus sales … at least when the macro economy is ok.
I am feeling slightly more optimistic this year. The Holiday season is a bit longer with Chanukah beginning mid December. It depends on more factors than shopping days. There should be more online shopping with pickups in the stores. That should lead to more impulse buying which is stronger this time of year.
I’d make a case for shopping as escapism as an essential coping mechanism for the American consumer, positively affecting the season’s performance. The public is bombarded with too many daily news stories of a dreary apocalyptic future. But in the time they’ve got left, they can still buy a new tablet, fill out the wardrobe, get a latte and fresh-baked Mrs. Fields chocolate chip cookie, and let the uncertainties of the future melt away at the mall.
For this reason, I’m optimistic and expect a promotions-fueled holiday season that falls a little short of the NRF estimates — short mostly because of the low total employment numbers. But I reserve the right to raise my forecast given the right combination of caffeine and sugar-laced goodies on my next visit to the mall.
I am cautiously optimistic about the upcoming holiday season. The difference between success and failure this holiday season will be effective pricing and the ability to create a sense of urgency. In order to get consumers to spend their hard earned dollars, retailers must use psychological pricing to position their products as a good deal that shoppers need to jump on.
Online retail should definitely see an increase this year because being in crowded stores and long lines gets tiring and consumers know that they have options for getting the same goods. Retailers will have to work harder to get orders out on time to avoid the blunders of last year and boost consumer trust and loyalty.
I am concerned, people. I am observing in the Midwest and it is not pretty out here in “fly-over” country. It may be fly over, and some locations, especially on the coasts may be okay, but the fly over area is pretty big and there are a LOT of areas where the economy locally is downright awful!
We keep hearing how great the economy is doing and how wonderfully everything continues to recover, but honestly there are a lot of places where that simply is not the truth.
Perhaps the coastal areas where things are better will be able to carry it?
Unclear, but I generally tend to the optimistic.
On the one hand, we have a slightly longer shopping season, cheaper gas and better employment rates. On the other, we have quite a few unpredictable factors that may hurt spending levels such as disease (Ebola), above normal precipitation levels for the US and Canada and war (ISIL), and the concern that much of consumers’ discretionary spending has already been allocated to the Apple iPhone 6, Watch and other recent Apple releases.
Hopefully, however, consumers will get a jump on online spending and avoid many of the issues we have ahead of us this year. And if online spending this year has grown as rapidly as research has shown, I am hopeful this will be the key to a successful holiday season for retailers. Either way, I can see it being a barometer for overall economic performance in 2015.