Holiday sales are likely to show decent gains this year, but there are early signs that they won't come cheap, as retailers once again are expected to use aggressive discounts and promotions to win traffic and sales.
Both Deloitte and AlixPartners on Wednesday forecast an upbeat holiday sales season. Deloitte projects holiday sales between November and January will rise 4% to 4.5% from a year earlier to as much as $1.05 trillion. Not surprisingly, it expects online sales to rise at a much faster pace, gaining 18% to 21% to as much as $114 billion, or about 11% of the total holiday retail sales.
Among the leading contributors to consumer spending, this year’s holiday period may see disposable personal income growing as much as 4.2%, more than double the 2% rate a year earlier, Deloitte’s senior US economist, Daniel Bachman, said, adding consumer confidence remains “elevated,” “the labor market is strong” and “the personal savings rate should remain stable at the current low level.”
AlixPartners, meanwhile, expects holiday sales in November and December to rise 3.5% to 4.4% from the year-earlier period. That represents one of the highest holiday growth rates it tracks since the recession and comes on the heels of back-to-school sales posting the third highest growth rate in the past 10 years, said Roshan Varma, a vice president in the retail practice at AlixPartners, in an interview.
For its part, industry analytics firm RetailNext on Tuesday projected November and December holiday sales will rise 3.8%, led by a 14.9% increase online.
The forecasts are a bit more optimistic than eMarketer's latest forecast, released in August, which projects total retail holiday sales growth at 3.1%, with ecommerce sales rising 16.6%, the strongest growth in six years.
The generally positive forecasts stand in contrast to the seemingly endless stream of negative developments for individual retailers: this week alone saw a bankruptcy filing by Toys “R” Us, and a quarterly profit decline and bigger-than-expected comparable sales drop for Bed Bath & Beyond.
But the overall forecasts reflect an industry where market share is shifting rapidly and traditional brands are struggling to deal with digital disruption and shifting consumer tastes. “Although there’s been a lot of turmoil (in the industry), consumers are still spending,” Varma said. “More stores are opening than closing. There are definitely winners and losers.”
Among the winners? Retailers that can successfully integrate online and in-store operations, offer customers an exclusive experience or change promotions and marketing on a local basis, he said.