by Apparel Resources
03-December-2017 | 8 mins read
As the holiday season nears, both retailers and consumers have expectations… While the retailer looks at this season as the biggest sales opportunity of the year, shoppers look for deals and gifting ideas that are current and affordable. According to early prediction from Deloitte, holiday sales could grow as much as 4.5 per cent, which would match results in 2015 after a relatively slow growth last year, wherein growth was only 3.6 per cent. Even AlixPartners, a consulting firm best known for its work in the turnaround space, has forecasted retail sales to rise from 3.5 to 4.4 per cent this holiday season.
The general expectations of better holiday sales this year are based on increasing disposable personal income and consequent consumer confidence across the US. “Sentiment and spending indicators are firing on all cylinders, but the question is: How will retailers respond given the profound disruption across the industry?” said Rod Sides, who heads up Deloitte’s Retail & Distribution practice.
Indeed, the question being asked by many industry watchers is whether retailers will be able to satisfy the shoppers who are coming out after a few bad months. “The overriding question is whether individual retailers can take advantage of the period ahead and redouble their efforts to deal, both strategically and tactically, with everything from the rise of online shopping to the fact that many younger consumers today prefer spending their money on experiences rather than on tangible products,” said Joel Bines, co-head of AlixPartners’ retail practice about this year’s holiday season.
But not every retail research group is as upbeat about the sales this holiday season as since the start of the year, the US monthly consumer price index has missed analysts’ estimates four times, according to Thomson Reuters data. In September, The National Retail Federation (NRF) revised its retail growth predictions to only between 3.2 per cent and 3.8 per cent, down from 3.7 per cent to 4.2 per cent growth estimated in February. The industry group said weaker-than-expected spending in the first quarter along with decelerating inflation also contributed to the revision, but it did add that it expects strong sales heading into the fall and holiday seasons.
Significantly, more recently, NRF has again revised its estimations, announcing that it expects holiday retail sales in November and December – excluding automobiles, gasoline and restaurants – to increase between 3.6 and 4 per cent for a total of US $ 678.75 billion to US $ 682 billion, up from US $ 655.8 billion last year. “Our forecast reflects the very realistic steady momentum of the economy and overall strength of the industry,” said NRF President and CEO Matthew Shay. He added, “Although this year hasn’t been perfect, especially with the recent devastating hurricanes, we believe that a longer shopping season and strong consumer confidence will deliver retailers a strong holiday season.”
Significantly, Christmas falls 32 days after Thanksgiving this year, one day more than last year, and is on a Monday instead of Sunday, giving consumers an extra weekend day to complete their shopping. Last year, the emotional run up to the presidential elections impacted the holiday season and the core holiday season began early in 2016, with major Black Friday sales starting the week before Thanksgiving.
The online season also ran closer to Christmas, with both consumers and retailers more confident about the ability to have products shipped on time. The convergence between physical and online shopping continued during the 2016 holiday season, with more ads driving foot traffic and more online services enhancing the in-store experience. This year too online shopping is expected to dominate the buying space.
E-commerce has the edge…
As consumers continue to spend more online due to the convenience, selection, and value, predictions for online sales is much higher than that expected at brick and mortar stores. In its recent report, Forrester predicts that US online holiday sales will reach US $ 129 billion in 2017. This represents 12 per cent growth in holiday sales over 2016. As per predictions given by Deloitte, E-commerce sales are expected to increase 18 to 21 per cent during the 2017 holiday season, bigger than last year which climbed 14.3 per cent in 2016.
However, retail search marketing firm, NetElixir says e-commerce sales are increasing at a slower rate than previous holiday seasons and based on nine years of aggregate data from mid-sized and large online retailers, NetElixir forecasts this year’s holiday e-commerce sales will see a 10 per cent year-over-year growth rate, a slight drop compared to last year’s growth rate of 11 per cent. “This year, we have seen an overall sales slowdown and retail drop with more store closings,” claims NetElixir in its news release.
Not every retailer is looking at traditional seasonal hiring…
Target is one of the first retailers to announce its hiring plans for the 2017 holiday shopping season. According to latest company release, the retailers plan to hire 1,00,000 workers for the 2017 holidays, up 40 per cent from last year, a clear indication that the retailer expects significant growth in sales this year. However, Walmart is redefining the holiday hiring scene, announcing that it won’t be hiring additional staff for its stores this holiday shopping season, instead it will offer extra hours to its current staff of 1.5 million employees in the US. Industry watchers feel that now opportunities for temporary store jobs may be harder to get in coming years as retailers try to give their existing employees a chance to pad their pay checks.
Further, online shopping has been shifting holiday jobs in recent years to retailers’ fulfilment centres and to shipping companies such as FedEx and UPS. In fact, though Macy’s is hiring 80,000 seasonal workers this year, it is about 3,000 fewer than last year. One cannot overlook the fact that the retailer has closed many stores this year and is shifting more of those temporary staffers to e-commerce positions. About 18,000 seasonal jobs will be in fulfilment facilities, and that number represents 20 per cent more people in those jobs than last year.