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.

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Retail

NRF: March Retail Sales Climb 5%, Three-Month Average Jumps 4.8%

The March results build on the higher sales seen in February, which was up 0.2% over January and 4.3% year-over-year. These numbers exclude sales of automobiles and at gasoline stations and restaurants.

The NRF numbers are based on data from the U.S. Census Bureau, which said overall March retail sales — including automobiles, gasoline and restaurants — were up a seasonally adjusted 0.6% from February, and up 4.5% year-over-year.

“This is a healthy spending report despite market volatility, unseasonable weather and uncertain economic policies,” said NRF Chief Economist Jack Kleinhenz in a statement. “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 values and judicious use of credit. The biggest risk to spending is in market fluctuations that could affect confidence, but we expect these basic improvements in economic fundamentals to continue.”

All sectors except sporting goods saw sales improvements in March on a year-by-year basis. Sporting goods stores saw sales declines of 0.9%.

  • Online and other non-store sales: up 7.6%;
  • General merchandise: up 6.3%;
  • Clothing and clothing accessories: up 6.1%;
  • Grocery and beverage: up 5.9%;
  • Furniture and home furnishings: up 4.1%;
  • Building materials and garden supplies: up 3.8%;
  • Electronics and appliances: up 1.6%; and
  • Health and personal care: up 0.4%.

April retail sales jump 0.4% as e-commerce climbs 9.6% from last year

Dive Brief:

  • Retail sales in April (excluding sales from auto dealers, gas stations, building materials and food services) rose 0.4% from March 2018, according to the latest monthly report from the U.S. Commerce Department’s census bureau. March sales were revised upward to a 0.8% rise, from the previously reported 0.6%.
  • Nine of the 13 major retail categories posted positive sales results in April compared with March, according to retail think tank Coresight Research’s breakdown of the report. Clothing and accessories rose 1.4%, furniture sales rose 0.8% and e-commerce rose 0.6%. But health and personal care sales fell 0.4%, and electronics and appliance sales fell 0.1%, the Census Bureau said.
  • E-commerce sales in the period rose 9.6% from last year, while overall retail sales excluding auto rose 4.8% year over year, according to the government’s report.

Dive Insight:

April marked another month of robust sales for retailers, despite a cold spring in many parts of the country, thanks to an overall healthy economy.

“Spending was sluggish at the start of 2018, but April marked the second consecutive month of growth,” according to a report from Coresight CEO Deborah Weinswig. “More broadly, consumer spending has been lifted by a falling unemployment rate, which in April was a historically low 3.9%. Measures of consumer confidence have remained high in recent months, which economists attribute to the recent tax cuts, a healthy labor market and broader economic growth.”

And tax cuts could help mitigate the rise in gas prices this year, according to NRF Chief Economist Jack Kleinhenz.

“Retail sales growth remains solid and on track as households benefit from tax cuts even though they have faced unseasonable weather and bumpy financial markets,” Kleinhenz said in a statement emailed to Retail Dive. “And a solid job market, recent wage gains and elevated confidence translate into ongoing spending support.”

But it’s worth looking at just where shoppers are spending the most: As first quarter reports have come in for 39 retail chains tracked by Retail Metrics, retail earnings are up 15.8% year over year, with just four retailers accounting for all that reported growth. Drugstore chains CVS and Walgreens both turned in “sizeable” first quarter surprises that accounted for about 300 basis points of reported earnings growth, according to a Retail Metrics note emailed to Retail Dive. Costco was responsible for another 300 basis points of earnings growth and Home Depot, which reported a 20% year-over-year first quarter operating income boost this week, is responsible for 1,000 basis points.

Without Home Depot, CVS, Walgreens or Costco however, reported Q1 retail earnings fell 0.7%, according to Retail Metrics.

E-commerce continues to outpace in-store sales, according to two indices of U.S. retailers from ProShares, measuring year to date sales through market close on May 14. The Solactive-ProShares Bricks and Mortar Retail Store Index (which includes leading legacy retail companies) fell 3.08%, while the ProShares Online Retail Index (which tracks tracks U.S. and non-U.S. retailers primarily selling online or through other non-store channels with a market capitalization of at least $500 million, including Amazon) rose 19.26%.

Retail Sales Inch Up in April

The National Retail Federation said that retail sales in April showed a 2.8 percent year-over-year increase in the U.S retail market, excluding auto sales, gasoline stations and restaurants.

“Retail sales growth remains solid and on track as households benefit from tax cuts even though they have faced unseasonable weather and bumpy financial markets,” said Jack Kleinhenz, the chief economist for the National Retail Federation, based in Washington, D.C. “The tax cuts and higher savings levels should help consumers afford the recent surge in gasoline prices. And a solid job market, recent wage gains and elevated confidence translate into ongoing spending support.”

The NRF broke down April results for different retail categories. Results were mixed for apparel stores. Sales for clothing and clothing-accessory stores dipped 0.4 percent in a year-over-year basis. However, April apparel sales were up 1.4 percent compared to the previous month.

Online and other non-store sales were up 12.2 percent in a year-over-year comparison. Compared to the previous month, sales increased 0.6 percent for e-retailers.

Ken Perkins, president of the market-research group Retail Metrics, also posted a recent note saying business was good in April. He said that expectations for the month had been low because cold weather was predicted for much of the U.S. Wall Street analysts also forecast that many consumers may have been suffering from shopping fatigue. The nation’s retailers experienced a spike in business because Easter took place on April 1.

In Perkins’s research note, he discussed the April performance for L Brands, the parent company of Victoria’s Secret and Bath & Body Works. Bath & Body Works reported a 6 percent same-store-sales gain during April. Victoria’s Secret posted a 2 percent decline.

Retail sales show healthy jump in April

April’s retail sales were 0.4 percent higher compared to March and 2.8 percent higher compared to a year ago.

The sales data, from the National Retail Federation, does not include sales at gas stations, restaurants or auto sales.

“Retail sales growth remains solid and on track as households benefit from tax cuts even though they have faced unseasonable weather and bumpy financial markets,” NRF Chief Economist Jack Kleinhenz said in a press release on the data. “The tax cuts and higher savings levels should help consumers afford the recent surge in gasoline prices. And a solid job market, recent wage gains and elevated confidence translate into ongoing spending support.”

 

May Retail Jobs See Huge Year-Over-Year Increase

he retail industry employment increased by 28,800 jobs seasonally adjusted in May over April and 100,200 jobs unadjusted year-over-year, the National Retail Federation said Friday. The numbers exclude automobile dealers, gasoline stations and restaurants. Overall, U.S. businesses added 223,000 jobs, the Labor Department said.

“May’s rebound in jobs, together with yesterday’s report of solid income growth and the rise in consumer confidence, points to the economy functioning very well,” NRF Chief Economist Jack Kleinhenz said. “Solid fundamentals in the job market are encouraging for retail spending, as employment gains generate additional income for consumers and consequently increase spending.”

“With the unemployment rate of 3.8 percent at its lowest since April 2000, this shows that many industries, including retail, are hiring and creating jobs at a steady pace. We expect this rate to continue to decline as the fiscal stimulus and tax cuts are further absorbed in the economy,” Kleinhenz said.

May’s numbers followed an upwardly revised combined increase of 19,300 jobs for March and April. The three-month moving average in May showed an increase of 19,000 jobs.

Retail registered monthly gains nearly in all segments with the most robust increases concentrated in three sectors: general merchandise stores, which were up 13,400; clothing and clothing accessory stores, up 6,500 and building and garden supplies, up 6,000. Losses were concentrated in two sectors: health and personal care stores, down 800 jobs and non-store which includes online, down 1,100 jobs.

Economy-wide, average hourly earnings in May increased by 8 cents–2.7 percent–year-over-year.

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.

NRF: Retail Employment Gains

According to the National Retail Federation, retail industry employment in the U.S. increased by 28,800 jobs seasonally adjusted in May over April and 100,000 jobs unadjusted year-over-year.

The numbers exclude automobile dealers, gasoline stations and restaurants. Overall, U.S. businesses added 223,000 jobs, the NRF said, citing U.S. Labor Department figures.

May’s retail employment follows an upwardly revised combined increase of 19,300 jobs for March and April. The three-month moving average in May increased by 19,000 jobs.

The sectors demonstrating the strongest employment growth were general merchandise stores, up 13,400 jobs; clothing and clothing accessory stores, up 6,500 jobs; and building and garden supplies, up 6,000 jobs. Employment declines occurred in health and personal care stores, down 800 jobs, and non-store including e-commerce, down 1,100 jobs.

“May’s rebound in jobs together with yesterday’s report of solid income growth and the rise in consumer confidence points to the economy functioning very well,” said Jack Kleinhenz, NRF chief economist. “Solid fundamentals in the job market are encouraging for retail spending, as employment gains generate additional income for consumers and consequently increase spending.”

COMMERCIAL DESIGN LEADS RESULTS IN THE LATEST ASID BILLINGS INDEX

The AMERICAN SOCIETY OF INTERIOR DESIGNERS (ASID) has released its Interior Design Billings Index (IDBI), a statement on the latest trends and BEST PRACTICES in design as well as an indicator of the economic health of the industry. Per the first quarter’s monthly reports, which are gathered from ASID panelists, the latest IDBI shows positive projections for 2018.

Regional performance was one of the larger variations reported in the findings. While the Midwest, West and South witnessed a continued increase, the Northeast region suffered a drop in business—a finding that principal and chief economist Jack Kleinhenz of Kleinhenz & Associates attributes to harsh weather conditions in the region this winter.

Commercial design leads results in the latest ASID Billings Index“As we move further in 2018, that’ll help provide some fuel for maybe some spending in the industry.”

Commercial and institutional design firms experienced an increase in work in the first quarter, while single-family and multifamily residential projects continue to endure a steady decline. Yet, Kleinhenz says, the economy is broadly improving, as recent tax cuts are offering Americans an increased take-home pay.

“It’s certainly an incentive for [people] to make MORE INVESTMENTS in their homes,” says Kleinhenz. “As we move further in 2018, that’ll help provide some fuel for maybe some spending in the industry.”

Following the industry billings report, Susan Chung, director of research for ASID, presented a work assessment of the interior design profession. Members’ responses contributed to the informative results, which revolved around pay, work management and more.

Are you expecting a pay increase this year? The questionnaire asked. More than half of respondents answered positively, with an average increase of 5.2 percent in pay expected in 2018. “Although we do see pay increases happening, we also see that the hours we work are also slightly increasing,” Chung points out.

Nearly half of those surveyed reported working 40 to 50 hours on average per week, and 23 percent claimed to work more than 50 hours. The results showed that those who worked more hours tended to work at larger firms.

The survey also reviewed work-management systems, asking if respondents expected to hire any additional employees this year. Thirty percent of participants claimed to have already made a new hire in the first quarter, while an additional 10 percent of respondents answered affirmatively.

Yet when asked if they’ve made any investments in their firms (i.e., purchasing or billing software, design software, hardware, etc.) during the first quarter, 60 percent of respondents declined.

In the six-month forecast, however, Kleinhenz is hopeful, saying: “It reflects an improving broader economy in general and a positive outlook for the design services industry in the coming months.”

The full report can be found HERE.

May retail sales surge 6% over last year

Dive Brief:

  • Retail trade sales rose 0.8% in May from April, and 6% percent from May last year, according to the latest monthly report from the U.S. Commerce Department’s census bureau. Excluding automobiles, gasoline stations and restaurants, May retail sales rose 0.7% from April and 5.6% from May last year, according to the National Retail Federation.
  • Most categories are benefiting from the healthy economy. Monthly furniture and home goods sales dropped 2.4% (rising 3.5% year over year) and sporting goods, hobby and bookstore sales dropped 1.1%. (declining 0.7% year over year). But electronics sales rose 0.2% (1.9% year over year), department store sales rose 1.5% (2.1% year over year) and apparel and accessories sales rose 1.3% (5.9%) year over year, the government said.
  • E-commerce sales rose 0.1% from April and 9.1% year over year, according to the federal report.

Dive Insight:

The U.S. economy, underpinned by strong growth and employment, is operating on all cylinders, and that is boosting retail sales and is evident in most earnings reports of late. Increases in household budgets from tax changes and good credit availability are also helping, according to NRF Chief Economist Jack Kleinhenz.

“The economy is looking strong and households have a solid financial foundation on which to base their spending,” he said in a statement this week. “We have seen ongoing momentum over the last several months and believe sales growth should remain healthy and consistent with our 2018 outlook.”

The three-month moving average rose 4.6% over the same period a year ago, topping NRF’s forecast earlier this year that retail sales this year will grow between 3.8% and 4.4%, the organization said.

But while the near-term outlook remains strong, tax reform and the administration’s new tack on trade could undermine all that, according to the International Monetary Fund’s latest report card on the U.S. economy. Tax cuts and spending policies mean the federal deficit will exceed 4.5% of GDP by 2019, and tariffs being imposed and proposed “are likely to be damaging to a range of countries, and to U.S. multinational companies, that are reliant on these supply chains,” the IMF said.

That includes retailers, and Kleinhenz agrees that there’s trouble on the horizon. “[I]nflation and rising oil prices are complicating the picture,” he said. “And new tariffs or a trade war would certainly be negatives that would increase prices and reduce both consumer purchasing power and consumer confidence.”

Retail Dive

Retail Sales Figures

Retail-sales figures

WASHINGTON

Nonseasonally-adjusted May retail sales increased 5.6 percent year-over-year and seasonally adjusted sales increased 0.7 percent over April, the National Retail Federation announced.

“The economy is looking strong and households have a solid financial foundation on which to base their spending,” said NRF Chief Economist Jack Kleinhenz.

He noted increased take-home pay due in part to tax cuts, low unemployment, and high availability of consumer credit as factors.

“We have seen ongoing momentum over the last several months and believe sales growth should remain health and consistent with our 2018 outlook,” he said. “Nonetheless, inflation and rising oil prices are complicating the picture. And new tariffs or a trade war would certainly be negatives that would increase prices and reduce both consumer purchasing power and consumer confidence.”

Staff/wire reports

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