RETAIL Online Spending Could Top $124B Over The Holidays

Retail Pundits Reveal Key Spending Themes This Holiday 2018 Shopping Season

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A lot of people will shop for the holidays! And they’ll buy online! And they will look at their phones a lot, too!

Duh.

It’s that time of year again, folks, when we retail reporter types can sometimes spew breathless pronouncements on the sometimes not-so-revelatory predictions pundits make on the make-or-break holiday selling season, when merchants generate a disproportionate chunk of their annual sales.

Here’s some predictions worth noting. Let the games begin.

Feeling Financially Flush, Consumers Will Spend More Than They Have In Five Years

The National Retail Federation expects holiday retail sales in November and December — excluding automobiles, gasoline and restaurants — to rise between 4.3% and 4.8% over 2017, for a total of  $720.89 billion. The forecast compares with an average annual increase of 3.9% over the past five years.

“The combination of increased job creation, improved wages, tamed inflation and an increase in [consumers’] net worth all provide the capacity and the confidence to spend,” the NRF’s chief economist Jack Kleinhenz said, in a statement.

Online retail will be the most popular shopping destination, with 60% of consumers planning e-commerce gifting this holiday season, according to a Deloitte survey.

An estimated 57% of holiday dollars will be spent online, eclipsing in-store purchasing, which is forecasted to account for 36% of consumer spending.

More than 70% of shoppers surveyed noted free shipping, while two-thirds cited time savings and home delivery, as the key reasons they’ll buy online this holiday, the survey found.

Of the nearly 50% of consumers who plan to use their smartphones to shop this holiday, 67% plan to use mobile to make a purchase, up from 57% last year.

Mass merchants are the second most popular venue for holiday shoppers (52%, up from 44% in 2017). Traditional department stores and off-price retailers round out the top-four shopping destinations.

Fewer Baubles And Blouses, More Brunches And Broadway Shows

Over the last five years, U.S. consumers have diverted more of their holiday budgets to experiences such as home entertaining and socializing away from home, which now represent 40%, or $611, of  survey respondents’ planned holiday budgets, the Deloitte study found.

While physical gift purchases, from clothes to household appliances, still dominate holiday purchases, they’re down trending. The number of shoppers who plan to buy a product has dropped 11% from 2017, according to Accenture. By contrast, shoppers planning to buy an experience or service-geared gift, from a meal out and a concert ticket to a cleaning service, rose 5%.

Millennials Will Be The Biggest Spenders, Practicing Conscious Consumption

An estimated 49% of younger Millennials plan to spend more this holiday than in 2017, while only 13% of their Baby Boomer counterparts expect to spend more than they did a year.

And Generation Y’s shopping venues will reflect their belief system. For example, 54% of younger Millennials said retailers have a duty to address broader social and political issues, such as diversity, be it gender, ethnic or disability inclusion, and they will reward merchants that do just that: 51% of younger Millennials surveyed are more likely to shop at a retailer that demonstrates awareness of these issues, the Accenture study found. “Our research suggests that younger Millennials are more likely to choose one brand over another if that brand demonstrates inclusion and diversity in terms of its promotions and offers, their in-store experience, their product range, and their environmental awareness,” said Jill Standish, senior managing director and head of Accenture’s retail practice, in a statement.

I’ve been a business journalist specializing in the retail industry for over a decade, covering consumer news, company profiles and industry analysis pieces, as well as the intersection of business news and shopping, fashion and social trends.

I was the retail and con…

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Retail

5 Things Retailers Need to Consider Heading Into the 2018 Holiday Shopping Season

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For most retailers, the 2018 holiday shopping season will present their biggest opportunity of the year to engage with customers. It will also represent the bulk of their annual sales.

As a result, this time of year is crucial for retailers to achieve success. With that in mind, current conditions make this holiday shopping season look positive for retailers.

1. Consumers Are Upbeat About Spending 

From what we’ve seen, customers are excited about shopping this year.

Brick-and-mortar sales will grow 1.4 percent and online growth is expected to reach 14 percent, according to Forrester Analytics: Online Holiday Retail Sales Forecast, 2018 (U.S.). Various studies also show that the average U.S. consumer will spend more during the upcoming holiday season, jumping from $1,226 per consumer to $1,536.

Deloitte’s annual holiday economic forecast looks great for retailers as well. Consumers seem confident about the economy, their household financial situations, and their spending plans for the upcoming holiday season.

Deloitte’s consumer survey shows online spending continues to grow and is expected to account for 57 percent of all purchases. Also, Deloitte’s research notes that shoppers are enthusiastic about the holiday season and remain price- and value-focused.

Based on the report, retailers are in a good spot to influence where consumers shop this year as many shoppers are entering the season undecided.

2. Thanksgiving is Coming Early

Consumers are doing their holiday shopping earlier based on a study by Bazaarvoice. An early Thanksgiving helps spread the holiday shopping theme to consumers.

Thanksgiving is as early as it can be this year (Nov. 22) which could prove helpful to retailers. Sixty percent of consumers say they begin their holiday shopping before Thanksgiving . This is particularly important this year because there will be 33 days between Thanksgiving and Christmas.

Retailers have that much more time to fully engage consumers this holiday season. Although spending will increase this holiday season, retailers must be conscientious when it comes to identifying their best customers who are most likely to spend the most.

It appears that consumers look forward to spending early for their holiday shopping . This fact, combined with the Thanksgiving retail shopping period that includes Black Friday and Cyber Monday, means brands need to be prepared for this critical holiday shopping period around Thanksgiving.

3. The Strong Economy Will Help Retailers

Consumers are confident about the economy for several reasons. National Retail Federation President and CEO Matthew Shay cited some of these factors .

“Thanks to a healthy economy and strong consumer confidence, we believe that this holiday season will continue to reflect the growth we’ve seen over the past year,” Shay noted.

Holiday sales in 2017 totaled $687.87 billion, a 5.3 percent increase over 2016 and the largest increase since the 5.2 percent year-over-year gain seen in 2010 after the end of the Great Recession.

“Last year’s strong results were thanks to growing wages, stronger employment, and higher confidence, complemented by anticipation of tax cuts that led consumers to spend more than expected,” NRF Chief Economist Jack Kleinhenz said. “With this year’s forecast, we continue to see strong momentum from consumers as they do the heavy lifting in supporting our economy. The combination of increased job creation, improved wages, tamed inflation and an increase in net worth all provide the capacity and the confidence to spend.”

All of these strong macroeconomic factors have contributed to one of the best consumer discretionary spending environments in years .

Consumer confidence in the economy is a powerful thing during the holiday season, which places retailers in an ideal situation to enhance engagement and retention levels.

4. Retailers Can Make the Holiday Season a Memorable One

Retailers can take advantage of the favorable economy and positive consumer sentiment through customer insights data during the holiday season.

Preparation for the holiday season is imperative for retailers. One under-the-radar element of holiday preparation for retailers should be website performance.

Whether it is a brick-and-mortar store or an ecommerce site, online presence marks the essence of every business strategy todayChecking website performance, load time, application performance testing, application load test, and much more are quickly becoming inevitable for commercial success.

All these factors play a vital role, especially during the high-pressure holiday season when every small or big portal is trying to grab maximum profits from the market.

During the holiday season retailers need to ensure that store associates are well versed and excited about the loyalty programs they will be promoting.

5. Customer Engagement Shouldn’t End with the 2018 Holiday Shopping Season

The holiday season is a great time to engage and create new customers, but what happens after that? One of the strategies a retailer can use to achieve this goal is a loyalty program.

There are thousands of loyalty programs out there, but consumers are drawn to ones that are simple and offer real value.

A new study shows  that 40 percent of customers who refrain from signing up for loyalty programs do so because the value of being a loyalty member is not worth the time, money, or effort of signing up. And for those who sign up, 76 percent do so to qualify for special promotions.

Retailers should take note of these statistics and evaluate special offers for loyalty members to ensure that their promotions are competitive and offer value.

Effectively leveraging a loyalty program during the holiday season can go a long way toward retaining customers in the long run. That customer engagement during the holiday season should continue in the New Year to bolster your consumer relationships.

Loyalty program signup is important throughout the year, but it takes on added importance and relevance during the holiday season.

Happy Holiday Shopping Season

If brands listen to their customers, identify their pain points, and meet their expectations, they can build solid two-way relationships that extend well beyond the holiday season.

Given the fact that consumers are upbeat about spending in a strong and vibrant economy, retailers can and should take advantage of the early Thanksgiving and make this holiday season a memorable one through increased customer engagement, more promotions around value-driven loyalty programs, and ensuring that store associates are proficient in your key brand messaging.

Creating memorable moments is a huge part of the holiday season.

Focus on your customers and enjoy a Happy Holiday Shopping Season!

11:06:55 AM EDT By 

Retailers Should Have a Happy Holiday Season

Barrons Vito J. Racanelli

The Amazon threat still hangs over many bricks-and-mortar retailers, but the coming holiday season should be a happy one for most, according to projections from the National Retail Federation.

The NRF said Wednesday it expects retail sales in November and December—excluding automobiles, gasoline and restaurants—to increase between 4.3% and 4.8% over the year-ago period, or to about $717.5 billion to $721 billion, says NRF chief economist Jack Kleinhenz. The sales rise projected compares with an average annual holiday season gain of 3.9% over the past five years.

Could the tariffs ruin the holidays for shoppers?

October 3

“Get out the Ouija board.”

That’s how one retail analyst summed up the tricky task of predicting what lies ahead for retailers and shoppers this holiday season. Analysts say there’s ample reason to expect record-breaking sales on the back of a strong economy, a historically low unemployment rate and upward-ticking wages.

But that’s all hedged by a hefty unknown: the threat of ongoing tariffs and an escalating trade war. President Trump’s latest round of tariffs have kicked in at 10 percent and are set to rise to 25 percent at the start of 2019. Nearly 6,000 products — including electronics and other go-to gifts — will see price increases that, in time, are expected to pass from retailers to consumers.

And while it’s unlikely that the brunt of those price hikes will take a toll over the next few months, experts agree that the sheer concern over how long the tariffs will last, and to what degree, could act as a Grinch to holiday shoppers.

“Business doesn’t manage uncertainty well, nor does the consumer, and there is no way prices don’t get passed through the consumer,” said Mark Cohen, director of retail studies at Columbia Business School. “The problem I have is, who knows on a day-to-day basis where this is headed?”

The retail industry is still optimistic. On Wednesday, the National Retail Federation announced it is expecting retail sales in November and December to increase between 4.3 and 4.8 percent over 2017 results, to as much as $720.89 billion. That forecast compares with an average annual increase of 3.9 percent over the past five years. (If Labor Day is any indicator, Americans spent a record $2 billion online then alone.)

But for comparison, holiday sales in 2017 rose 5.3 percent over the year before, totaling $687.87 billion, according to the NRF.

In mid-September, Deloitte anticipated retail holiday sales to increase 5 to 5.6 percent over last year’s shopping season — totaling at least $1.1 trillion between November and January. Rod Sides, leader of Deloitte’s U.S. retail and distribution practice, said shoppers are unlikely to make their shopping decisions based on geopolitical issues, such as global trade.

“A lot of it comes down to when they look in their checkbook or their pocket,” Sides said. “If they have a few extra dollars, whether it be the stock markets to the election to tariffs, it typically doesn’t trickle down.”

At the same time, retailers and industry groups have made their opposition to the tariffs clear. Last month, Walmart sent a letter to U.S. Trade Representative Robert E. Lighthizer cautioning that additional tariffs on $200 billion of Chinese goods would strike a blow. Walmart — the largest retailer in the country — wrote that the “immediate impact will be to raise prices on consumers and tax American businesses and manufacturers.” Target chief executive Brian Cornell said the company was “concerned about anything that would cause higher prices on everyday products for American families.”

That’s in concert with arguments from industry groups that say the tariffs will trigger price increases, even if not by this Thanksgiving or Christmas. The Retail Industry Leaders Association, an industry lobbying group, wrote to Lighthizer in September requesting the removal of more than 650 tariff lines from the proposed list of products subject to the latest wave of tariffs. Any tariffs on consumer goods proposed by Trump’s administration, the group wrote, are “nothing more than a hidden tax.”

Larger retailers have long since secured low-priced inventory to get them through the holidays and into the new year. But Hun Quach, vice president for international trade at RILA, noted that as the Chinese tariffs drag on, businesses large and small will be forced to restructure their supply chains. Changing the source on products as simple as plastic stickers can take as long as a year, she said.

“The pricing impact won’t hit immediately,” she said. “I think a lot of this uncertainty is about how long these tariffs are going to be in place.”

There’s also the question of whether retailers, embracing a strong economy and shoppers with money to spend, could increase prices anyway. But Cohen said that, even with signs pointing toward a strong holiday season, “the prospect of raising prices across the board is extremely problematic. There’s no getting away with that.”

Still, retailers will have to grapple with questions of when to time price increases on goods that will feel the full brunt of the tariffs at the start of 2019.

“Do you start to adjust prices now or do you wait until January?” Cohen said. “That’s a difficult decision.”

Mark Rosenbaum, department chair and professor of retailing at the University of South Carolina, said that many retailers placed their holiday-season orders over the summer, and that it would be unusual for them to alter the prices now because of the tariffs.

Jack Kleinhenz, chief economist at the National Retail Federation, noted that many of the tariffs apply to goods that have “already been ordered, and have been shipped and are on their way.” The “precise effects of the tariffs are not yet completely clear,” but any impacts are likely to hit closer to the start of 2019. The tariffs may hit prices for jewelry by Valentine’s Day, for example, but that may be the earliest shoppers will feel a difference.

In the meantime, retailers and shoppers will have reason to stay merry.

“Thinking about the ability to spend — the data shows that we are in a good place,” Kleinhenz said. “The picture looks very good.”

U.S. retailer group sees 2018 holiday sales up more than 4 percent

NEW YORK (Reuters) – U.S. holiday sales in 2018 will increase 4.3 percent to 4.8 percent boosted by a strong economy but will be slower than a year ago when consumer spending surged to a 12-year high, according to a forecast from a leading retail industry group.

The National Retail Federation (NRF) said holiday sales growth will be higher than an average increase of 3.9 percent over the past five years but slower than the 5.3 percent growth witnessed a year earlier when consumer spending grew the most since 2005 and was boosted by tax cuts.

“Last year’s strong results were thanks to growing wages, stronger employment and higher confidence, complemented by anticipation of tax cuts that led consumers to spend more than expected,” NRF Chief Economist Jack Kleinhenz said.

“With this year’s forecast, we continue to see strong momentum from consumers as they do the heavy lifting in supporting our economy,” he said.

The combination of more jobs, improved wages, tamed inflation and an increase in net worth all provide the impetus to spend, he added.

The retail trade group said it expects sales for the last two months of the year between $717.45 billion and $720.89 billion, excluding autos, gasoline and dining out. Holiday sales in 2017 were $687.87 billion.

NRF’s forecast is one of the most closely watched benchmarks ahead of the holiday season, when retailers like Amazon.com Inc, Walmart Stores Inc and Target Corp generate an outsized portion of their profits and sales.

The last two months of the year can account for 20 percent to 40 percent of annual sales for many retailers.

The NRF forecast follows other estimates from companies like AlixPartners, which says sales will grow in between 3.1 percent and 4.1 percent as “2017 will be a tough year to follow.” Forecasts from companies like Deloitte and PwC expect holiday retail sales to grow around 5 percent.

NRF also said Wednesday that it expects seasonal employment by retailers to reach between 585,000 and 650,000 jobs, up from 582,500 in 2017.

The price of rising employment: Slow wage growth, trade risks

If wage growth doesn’t kick into high gear, increasing inflation could swallow even the minimal improvement in purchasing power workers have attained.

A slowing rate of job growth in July nonetheless managed to pull some workers off the sidelines, but wage growth mired at 2.7 percent began to elicit concerns that wages will fail to keep up with inflation as the economy picks up steam.

At 157,000, the number of jobs created last month fell short of expectations, but upward revisions of the previous two months and a broad base of new jobs across industries left economists relatively sanguine about the miss.

“I don’t think you want things to be ‘great’ because great means the Fed worries about inflation and the economy moving ahead too quickly,” said Scott Wren, senior global equity strategist at the Wells Fargo Investment Institute. “The expansion killer is the Fed making a mistake, moving too fast. We don’t want to see great right now. We just want to see good.”
Upward revisions to May and June added a combined total of 59,000 jobs added, bringing the monthly average to 224,000 over the past three months.  “In the past, summer months tend to show large employment fluctuations due to the timing of seasonal hiring,” National Retail Federation chief economist Jack Kleinhenz said in a statement. The retail sector eked out a small gain of 7,000 despite a loss of 32,000 jobs, largely due to the closure of the Toys R Us chain.

 

The labor market sectors with the most notable growth in July were professional and business services, which added 51,000 jobs; and manufacturing and healthcare/social assistance, which added 37,000 and 34,000 jobs, respectively.

“U.S. manufacturing is flexing some muscle right now,” said Mark Hamrick, senior economic analyst at Bankrate.com, but noted these and other labor market gains could be threatened by President Donald Trump’s protectionist sentiments. “Obviously, there are huge risks associated with the trade dispute,” he said.

If wage growth doesn’t kick into high gear, increasing inflation could swallow even the minimal improvement in purchasing power workers have attained in the recovery so far.

“I don’t think we’ve seen the brunt of the tariffs yet,” said Arne Kalleberg, professor of sociology at the University of North Carolina at Chapel Hill. Manufacturing and agriculture-related jobs would be especially at risk if China or the European Union enact retaliatory sanctions, he said.

Derailing the current labor market expansion could hurt the most at-risk members of the workforce the most and slow mediocre wage growth even further, even as rising inflation erodes the value of Americans’ pay.

“We have to think about the fact that inflation’s running at a 2 percent rate,” Hamrick said. “We’re on this rising interest rate trajectory.” If wage growth doesn’t kick into high gear, increasing inflation could swallow even the minimal improvement in purchasing power workers have attained in the recovery so far.

Economists say demographics are one factor behind wage growth that trails what most experts consider the low end of healthy wage growth by nearly a full percentage point. As baby boomers leave the workforce, the younger and generally less-experienced workers taking their place don’t earn as much.

A yawning skills gap is another. Economists say a robust economy is drawing people back into the workforce, but this could be one of the factors holding down wage growth. “What businesses are having to do is they can’t find people with skills, so they have to hire them at unskilled wages and then train them,” said Dan North, chief economist at Euler Hermes North America.

The data bears this out: Compared to the topline unemployment rate of 3.9 percent, the broader U-6 measure of unemployment fell three-tenths of a percentage point to 7.5 percent in July, a percentage point lower than it was a year ago.

“Of course, the people hired without skills have lower productivity,” North added. The upshot is that unskilled workers aren’t being paid as much, which economists theorize could be holding down wage gains.

With fewer skills and lower productivity, these would be the workers most likely to lose out if companies have to start cutting jobs in response to a trade war-initiated slowdown. “I always worry about the quality of these jobs,” Kalleberg said. “There’s very little bargaining power on the part of workers.“

by Martha C. White / 

NBC News

March Retail Jobs Down from February but Up More Than 30,000 from 2017

WASHINGTON–(BUSINESS WIRE)–Amid fluctuations in weather and spring holidays, retail industry employment fell by 6,400 jobs seasonally adjusted in March but showed an increase of 30,800 unadjusted year-over-year, the National Retail Federation said today. The numbers exclude automobile dealers, gasoline stations and restaurants. Overall, the economy added 103,000 jobs, the Labor Department said.

“March was weaker than February but the trend is in the right direction”

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“March was weaker than February but the trend is in the right direction,” NRF Chief Economist Jack Kleinhenz said. “This time of year can be quirky given weather and the timing of Easter and Passover. We should be pleased with the broader picture because the economy is growing, creating substantial job gains at this time during the expansion. Even with this month’s dip, retail employment is still substantially higher than the beginning of the year and this time last year. Retail has not taken a step backward.”

March’s numbers followed a monthly increase of 42,400 jobs in February over January. The three-month moving average in March showed an increase of 14,200 jobs. There were 711,000 job openings in the retail industry in January, the highest monthly figure ever.

Monthly gains were seen in non-store, which includes online and was up by 4,300 jobs from February; miscellaneous stores, up 4,100; furniture, up 2,000; building and garden supplies, up 1,900; and electronics and health/personal care, which were each up 1,700. Declines were concentrated in three sectors that had shown significant gains in February – general merchandise stores, down 12,600; clothing and clothing accessory stores, down 7,300; and grocery stores, down 3,200.

Economy-wide, average hourly earnings in February increased by 8 cents – 2.7 percent – year-over-year. The Labor Department said the unemployment rate was 4.1 percent, unchanged for the sixth straight month.

Kleinhenz noted that retail job numbers reported by the Labor Department do not provide an accurate picture of the industry because they count only employees who work in stores while excluding retail workers in other parts of the business such as corporate headquarters, distribution centers, call centers and innovation labs.

About NRF

NRF is the world’s largest retail trade association, representing discount and department stores, home goods and specialty stores, Main Street merchants, grocers, wholesalers, chain restaurants and internet retailers from the United States and more than 45 countries. Retail is the nation’s largest private-sector employer, supporting one in four U.S. jobs – 42 million working Americans. Contributing $2.6 trillion to annual GDP, retail is a daily barometer for the nation’s economy.

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Contacts

National Retail Federation
J. Craig Shearman, 855-NRF-PRESS
PRESS@NRF.com

Retail sales gain is a sign tax reform may be working

Retail winners and losers in 2018

Consumers are increasing their spending, which may be a plus for the stock market during a period of volatility. U.S. retail sales rose in March more than forecast after three straight monthly declines, with consumers buying more big-ticket items. This evidence of healthy sentiment could drive markets higher in the second quarter.

Retail sales increased 0.6% in March after a 0.1% drop in February, the Commerce Department reported on Monday. The January retail data was revised down to show that sales declined by 0.2%, steeper than the previously reported 0.1% dip.

Economists polled by Reuters had forecast that retail sales would rise by 0.4% in March. Year-over-year, retail sales increased 4.5%.

There have been hopes that with many Americans seeing their paychecks increase because of tax cut savings, consumer spending would climb. Such an increase, in turn, would be good for the economy overall, with more than two-thirds of U.S. economic growth attributed to consumer spending.

“These are strong numbers, no doubt surging from the shot in the arm tax reform provided,” said Mike Loewengart, vice president of investment strategy at E*Trade. “Consumers are seeing more in their paycheck, and it appears they’ve gone shopping—certainly good news for investors.”

Stock markets have gone through a volatile period and are seeking direction.

“With most earnings reports arriving in the next few weeks, this is a pivotal time for a market that is in search of something positive to latch on to,” Loewengart added. “It appears, at least at the moment, strong economic fundamentals just simply aren’t enough to fire the bull rally back up.”

National Retail Federaton Chief Economist Jack Kleinhenz called the retail sales report a “healthy spending report” despite market volatility, unseasonable weather and uncertain economic policies. “Consumers continue to show resiliency in spending, and these numbers reflect how the economy is performing with a strong job market, gains in wages, improvements in confidence, rising home value and judicious use of credit,” he said.

By RetailFOXBusiness