NRF economist sees better days for retailers amid digital reinvention

The man from Cleveland strolled into a Manhattan shop hunting for two items: an overcoat and an overview. The first would shield him from the chill. The second would provide him even more intel on the state of American retail.

Jack Kleinhenz bagged both.

“I love the social interaction of the stores,” says Kleinhenz, chief economist for the National Retail Federation and principal of Kleinhenz & Associates, a financial consulting and wealth management firm based in Ohio. “It’s entertaining for me. Of course, that’s probably because of my job.

“I like to go in and just observe. On that visit, I tried on a coat and talked to some sales associates. I asked them how things are going, what’s new and how they’re doing.”

What he heard: They’re doing better.

Kleinhenz was in New York to attend NRF 2019: Retail’s Big Show. The industry’s annual, flagship event drew nearly 40,000 people to the Javits Center in January to see, sample and sell the latest retail goods and gadgetry.

In New York, Transform sat down with Kleinhenz to hear his views on the moods of both the sellers and the shoppers.

TRANSFORM: Heading into 2019, how hungry are consumers to spend their money in the stores and online?

JACK KLEINHENZ: The consumer is in a good place.

Financially, many households are in good shape. The ratio of monthly financial obligations to disposable income is still low, equal to what we saw 30 to 40 years ago, (according to the Federal Reserve Board). I think many people generally feel more secure – as far as their jobs and their balance sheets.

More broadly, we have some tailwinds going into 2019. We’re at near full employment. Wages have been increasing. Lower gas prices put more money into people’s hands to spend. And we’ve had some tax benefits, although it will be interesting to see what happens with tax refunds.

NRF chief economist Jack Kleinhenz speaks into a microphone.
NRF chief economist Jack Kleinhenz. (Photo by Jerry Masek)

TRANSFORMNew tech is front and center at NRF 2019: Retail’s Big Show. Which of these technologies have the greatest ability to elevate the retail companies that embrace them?

KLEINHENZ: It’s a great question but it’s hard to measure right now. I am seeing some interesting applications, specifically of AI and robotics.

Among the retail startups here that are using these new technologies, I’d say 15 to 20 percent of these firms could potentially be very, very successful over time.

Just look at what they’re doing. They’re making it easier and more cost effective for the retailer – and they’re making it attractive for the consumer.

TRANSFORM: What does it say to you that so many companies are investing in digital reinvention?

KLEINHENZ: That we’re not standing still.

You know, I love this line from (former racing star) Mario Andretti: ‘If everything seems under controlyoure not going fast enough.’And if (standing still) is the case, I think those companies have to move and they have to move fast. They can’t stand on their laurels. They can’t continue to operate as they have been.

TRANSFORM: What predictions about the digital revolution in retail have not come true?

KLEINHENZ: A few years ago, people would say: ‘Well, e-commerce is going to take over.’

What have we seen? We’ve seen a lot of convergence between e-commerce and bricks-and-mortar stores. They’re learning how they can be more effective in attracting consumers by having a store presence.

Retail firms are thinking: ‘No matter where I get sales, no matter what channel I get sales, that’s where I’ve got to go. So I have to do multiple channels.’ You’re not going to lose the consumer’s interest in actually going to a store, picking up an item, seeing and using that item in person.”

TRANSFORM: When you shop, what technologies do you use?

KLEINHENZ: I’m a multi-channel user. I go online and look at specific stores.

For successful e-commerce companies, if they can get you to their website, you become more loyal to them. That’s how they’re going to be successful rather than just having a consumer type a certain product into their browser and then seeing what that browser tells them.

For retailers, it’s all about creating that loyalty and that relationship. For me, I am a loyal customer of a number of retailers. I will shop online. But I also go to the stores. In fact, last weekend, I spent all day Saturday shopping with my wife, looking for an overcoat. And I found a good fit at a good price – a good day.”

U.S. retail-sales data go dark at a tough time for investors

U.S. Commerce Department/Bloomberg

The U.S. growth outlook hangs more than ever on American consumers’ resilience amid stock-market swoons and trade-war tensions, but key data on their spending — the biggest part of the economy — will be missing due to the government shutdown.

Was it a gangbusters Christmas shopping season as forecasts and anecdotal evidence suggested? Were consumers making big discretionary purchases in addition to essential spending as they entered 2019, even as some surveys showed confidence was waning? The answers will have to wait, as December retail sales won’t be released as scheduled Wednesday, Jan. 16, while the Commerce Department remains closed. Failure to reopen soon also would delay personal income and spending data, due Jan. 31.

Together, those reports constitute the most widely watched measures of household consumption, which accounts for about 70% of the economy. The disruptions come at a challenging time: Plunging regional gauges of U.S. manufacturing and business surveys indicate a slowdown in growth, and some big-name retailers have issued warnings about mixed holiday results.

While the solid job market remains a bulwark and consumers are in good shape, more — not less — information is needed to assess if the economy faces bigger-than-anticipated risks, one reason investors are nervous and Federal Reserve officials have emphasized patience in raising borrowing costs.

With no end in sight for the shutdown, a burgeoning concern is that data may not just be delayed, they may also not get collected as normal, Brown said.

For now, investors and analysts will have to rely on a patchwork of data. The Johnson Redbook report showed December sales rose from a year earlier, though it tracks a limited sample of results. The Retail Economist‐Goldman Sachs weekly chain-store sales figures are another source. Other groups provide clues on individual sectors, such as the National Restaurant Association’s monthly index.

The delay in government-issued economic releases “introduces a greater degree of uncertainty, which typically isn’t good,” said Jim Paulsen, chief investment strategist at Leuthold Weeden Capital Management LLC. “It does create some real risk of misinterpretation” as people compensate with other, sometimes partial, sources of information, like a retail CEO’s comments.

The nuances in signals from consumers were evident in executive comments from Kroger Co., America’s biggest supermarket chain.

“They feel incredibly good about the economy but very nervous about where things are headed,” Chief Executive Officer Rodney McMullen said Sunday in an onstage interview at the National Retail Federation’s annual trade show in New York.

Credit-card results from companies including Visa and MasterCard would help fill some of the void. The Fed’s Beige Book release on Wednesday may also provide anecdotal details on spending and other parts of the economy. That’s why some investors are taking the data disruptions in stride.

Bloomberg

“In a world of big data, there are so many other ways to get a view of the consumer than the monthly numbers from the Commerce Department,” said David Sowerby, portfolio manager at the investment firm Ancora, which manages $6.9 billion.

E-commerce sales during the holiday season jumped 16.5% from a year earlier, according to Adobe Analytics, which measured online transactions from 80 top U.S. retailers.

No instruments

Still, companies depend on broader economic data to make investment decisions, and without it they’re “to a degree, flying without any instruments,” said NRF chief economist Jack Kleinhenz.

The Commerce Department’s monthly data are crucial to get a bigger picture because about 90% of retail sales come from small businesses, he said. Recently, several large publicly traded retailers such as Macy’s Inc. and Kohl’s Corp. provided discouraging updates.

“It was disappointing news, but I don’t know how pervasive that performance was,” Kleinhenz said.

The trade association itself is somewhat in the dark until the government releases the data. Without official numbers, “we can’t provide our final report this week either” on holiday spending, according to NRF spokeswoman Ana Serafin Smith.

Nearly 1 in 8 Jobs Added in November in Retail, Says Report

A good chunk of the jobs created in November were in retail — likely to keep up with holiday sales — says the National Retail Federation.

Employment in retail was up by 18,600 jobs in November, seasonally adjusted from October, said the Federation. That means that of 155,000 jobs created in the overall economy last month, nearly one in eight were in retail.

Calling the retail jobs numbers “satisfying,” the federation’s chief economist, Jack Kleinhenz, said in a statement that the boost came during and after the wildfires in California and bad weather in other areas of nation, all of which likely dragged on the sector.

The numbers were a good sign, given the context of the overall economic and national picture, he said.

“In retail, the tight labor market has created sizable challenges in hiring – there are actually more retail jobs available than there are people to fill them. Retailers would hire more workers if they could find them,” said Kleinhenz, in a statement.

Still, compared to last year at the same time, unadjusted retail employment dipped by 16,300 jobs, said the group.

And, the Department of Labor, in its job report, noted that “retail trade employment changed little” in November, noting that most of the jobs created were in health care, manufacturing, transportation and warehousing.

The total employment numbers across all sectors released Friday by the Labor Department were considered a disappointment by many, as projections were for a bigger boost.

The jobless rate for retail was 4.2 percent; the unemployment rate overall remained unchanged at 3.7 percent.

Of the total positions in retail in November, most were at department stores, warehouse clubs and other general merchandise shops, while the rest were at a variety of merchants and in online sales. Many jobs were lost at sporting goods, hobby, electronics and appliances stores, according to the federation.

The group predicts up to $721 billion in retail sales over this holiday season.

Stocks are plummeting, but a U.S. recession doesn’t look imminent

Consumer sentiment has remained strong all year despite political head winds and market jitters.

Washington Post

By Heather Long
December 4
Alarm bells sounded on Wall Street this week as something happened that hasn’t occurred in a decade: The U.S. yield curve inverted. This is one of the most reliable predictors of a recession, and it spooked investors enough to send the Dow down almost 800 points (along with the realization that President Trump’s trade “deal” with China is flimsy, at best).

But this doesn’t mean a recession is happening tomorrow or even in 2019.

Roughly 70 percent of the U.S. economy is powered by consumer spending. As long as consumers are happy and opening their wallets, the economy will keep growing, and right now, consumers are in very good shape.

Here’s what happened Monday: The yield (amount of interest) on the two- and three-year U.S. Treasury bonds moved above the yield on the five-year Treasury bond. Inversion is when a short-duration bond yield is suddenly worth more than a long one.

“A flattening yield curve traditionally has been seen as a sign that investors expect future growth to weaken,” Vincent Heaney, Jon Gordon and Chris Swann of UBS wrote in a client note. “An inverted yield curve is seen by some as an early warning sign of an impending recession.”

[Trump has won little from China so far. There isn’t an ‘incredible’ deal yet.]

As UBS noted, this is an early warning sign, and it could take years for the recession to materialize. Consider that the three-year bond yield moved above the five-year in August 2005, yet the Great Recession didn’t begin until December 2007.

According to many Wall Street analysts, this week’s inverted yield curve isn’t a reason to panic but is another sign that the U.S. economy is probably peaking. Growth is widely expected to slow somewhat next year and even more so in 2020.

How much and how quickly the economy tapers is going to depend on U.S. consumers.

“This is the most confident American consumers have been in 18 years,” said Lynn Franco, director of the team that produces the Conference Board’s Consumer Confidence Index. “Just on holiday gifts, consumers plan to spend around $627 this year versus $560 last year, one of the strongest jumps we’ve seen.”

U.S. household incomes are rising as more people find jobs, and wage growth is at the highest nominal level in nearly a decade. More than 2.7 million more Americans are employed now vs. a year ago, the biggest gain since 2014. In many communities, people see visible signs of the economy’s strength when they view so many “We’re hiring!” signs around town. Franco says good job prospects are a key driver of consumer sentiment.

Consumer sentiment has remained strong all year despite political head winds and market jitters. People appear to be focusing on their own improving financial situations and not the headlines.

“Consumers have been pretty accurate forecasters of a recession,” Franco said. “There is usually a sharp decline in expectations for the future, followed by a decline in how consumers view the present situation.” But she said she’s not seeing that now.

On top of job and wage gains, many Americans have more money in their pockets from tax cuts. The typical middle-class household, earning $49,000 to $86,000 a year, received a $900 tax cut this year, according to the nonpartisan Tax Policy Center. Earlier this year, there were concerns that higher gas prices were eating up a substantial chunk of the tax savings as families had to shell out more money at the pump, but gas prices have fallen sharply in recent weeks and are now at a lower level than they were a year ago, according to the U.S. Energy Information Administration. It’s another factor helping consumers feel better off and making them likely to spend more.

“The recent drop in retail gasoline prices is poised to lift disposable income in the coming months,” said Neil Dutta, head of Renaissance Macro Research. “Disposable income is the main driver of consumption.”

[1 million Americans live in RVs. Meet the ‘modern nomads.’]

The brighter mood and fatter pockets of U.S. consumers are helping boost retail sales, according to Jack Kleinhenz, chief economist at the National Retail Federation. He expects retail sales to grow at least 4.5 percent this year, which would be the largest gain since 2014. His figures don’t include spending on gas or restaurants, so they are a good barometer of how much Americans are spending online or in brick-and-mortar stores.

If there’s a head wind for consumers, it’s debt. Household debt — mortgages, student loans, auto loans, home-equity lines of credit and credit cards — has now topped $13.51 trillion, which is above the previous peak from 2008, just before the worst of the financial crisis hit. Student loans often get the most focus since nearly 1 in 5 adults have some sort of student debt. Experts say it’s a clear hindrance, but they are encouraged that credit card and mortgage debt remain in check this cycle.

“People are using credit in a prudent way. They aren’t loading up on their credit cards,” Kleinhenz said. He pointed out that household debt as a percent of household income is low by historical standards.

An early warning sign could be car loans. Auto loans that are 90 days delinquent just hit the highest level since early 2012, according to New York Federal Reserve data. Auto loan delinquencies have steadily risen in the past six years, even as the economy has improved. It is a likely indication that lower-income Americans are still struggling, even though many states and the nation’s two largest employers — Walmart and Amazon.com — have lifted their minimum wages.

But Dutta of Renaissance Macro Research pointed out that disposable income has been rising 3.1 percent in the past five years while consumption has risen 3 percent, meaning a lot of people are living within their means. Dutta said that is a “dramatic departure” from the late 1990s and early 2000s, when consumption outpaced income by a sizable amount.

This week’s inverted yield curve is a reminder that the economic head winds at home and abroad are picking up. But experts say to watch the consumer for the best gauge on the U.S. economy’s health. So far, most signs point to ongoing strength.

US retail stocks on track for biggest sell-off since 2008

Investors turn negative in spite of bullish Christmas sales forecasts

Shares in US retailers are on course for their biggest quarterly sell-off since the financial crisis, putting the sector at the sharp end of Wall Street’s mounting concerns about the global economy and President Donald Trump’s trade wars. In a sudden reversal of the cautious optimism that had crept in this year over the industry’s ability to cope with the ecommerce revolution, S&P’s index of 95 leading listed retailers has dropped 17 per cent so far this quarter.

The market downturn has gathered pace just as the festive shopping season gets into full swing, in spite of a series of upbeat predictions about Christmas sales. Jack Kleinhenz, chief economist at the National Retail Federation, has nudged his forecast for the holiday period higher after commerce department figures on Friday showed core retail sales surged in November by the most in a year. Investors said the sell-off, which puts the sector on track for the steepest quarterly decline since the final three months of 2008, reflected worries about gathering storm clouds for retailers next year. Luxury, middle market and budget retailers have all been hit hard. S&P 500-listed losers include upscale jeweller Tiffany, down 36 per cent for the quarter so far, and mass market chain Target, off 23 per cent. Concerns include retailers being forced to shed stock at hefty discounts, in part because they have accelerated shipments through ports to avoid being subjected to higher tariffs, which the Trump administration has since put on hold. Chad Kessler, global brand president at American Eagle Outfitters, said rivals were still being “pretty promotional” since the Black Friday sales. “It seems like a lot of retailers have kind of maintained their Thanksgiving week promotions through the month so far,” he said. Even companies thought to have successfully weathered the rise of Amazon have been caught up in the rout, including electronics retailer Best Buy, which is down 30 per cent. The sell-off has erased all gains from earlier this year, when investors drove a rally in retail stocks on signs that a strong US economy and tax cuts were helping bricks and mortar companies deal with the online threat. “People went from saying the mall is dead to the mall is back with a vengeance,” said Simeon Siegel, analyst at Instinet. “The reality is that it never died — but it was also never as healthy as people thought.” The US economy remains robust and Mr Kleinhenz now anticipates retail sales for the season to come in at the high end of the National Retail Federation’s previously issued forecast of a year-on-year rise of 4.3-4.8 per cent.

However, Michael Arone, chief investment strategist at State Street Global Advisors, said: “Investors are concerned more about the longer-term outlook for retail — and the broader structural trends, such as the shift online.” Weak economic data from Europe and Asia — figures on Friday showed retail sales in China grew at the slowest pace in 15 years in November — have meanwhile added to fears about a global downturn. Analysts also pointed to concerns that trade tensions would force US retailers to either risk volumes by raising consumer prices or absorb higher costs themselves, especially if higher tariffs were implemented next year. Executives have sought to reassure investors that they can minimise the impact on profits. Jack Calandra, chief financial officer of men’s clothing company Tailored Brands, said last week it was halving the proportion of products it sourced directly from China from 30 per cent to 15 per cent. Shares in Amazon have dropped 20 per cent for the quarter so far, paring its market capitalisation to $778bn. S&P’s Select Retail Index is equal-weighted, meaning the decline in Amazon’s stock has not had an outsized impact.

Alistair Gray

Financial Times

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

Shutterstock photo

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.

Shoppers expected to give retailers a holly, jolly holiday season as they buy a bit more

, USA TODAY Oct. 3, 2018

Shoppers, buoyed by low unemployment and a slight uptick in wages, should make this a jolly holiday season for retailers, an industry trade group predicted Wednesday.

The National Retail Federation, an industry trade group, forecasts that sales in the last two months of this year should rise between 4.3 to 4.8 percent as compared to the holiday period in 2017.

Not counting purchases of cars, gas, or meals at restaurants, shoppers are expected to spend between roughly $717 billion and $720.89 billion in sales this year. The sales increase also tops the 3.9 percent average annual uptick the industry has seen in the last five years.

The forecast underscores the message from many retailers that the brisker sales they’ve reported in recent quarters are not a fluke. Shoppers spent $687.87 billion on purchases during last year’s holiday season, a 5.3 percent bounce over the previous year, and the biggest bump since 2010.

“Our forecast reflects the overall strength of the industry,” Matthew Shay, NRF’s president and CEO said in a statement. “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. While there is concern about the impacts of an escalating trade war, we are optimistic that the pace of economic activity will continue to increase through the end of the year.”

Giving gifts is great, especially if you can borrow the present later for yourself. Buzz60′ Tony Spitz has the details. Buzz60

National unemployment stands at 3.9 percent, close to an 18-year low. “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,” said Jack Kleinhenz, NRF’s chief economist.

NRF expects that overall retail sales for this year to be at least 4.5 percent higher than 2017.