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Holiday sales growth could top 5%

Holiday sales growth could top 5%

Author: Daphne Howland 

Source: Retail Dive 

  • Global consulting firm AlixPartners expects November through January retail sales to rise 4.4% to 5.3% year over year. But researchers warned of "unprecedented uncertainty" caused by recession fears, the incoming U.S. election, unrest abroad and "on-again, off-again tariffs," according to a report emailed to Retail Dive.

  • Advisory firm Deloitte, in a report emailed to Retail Dive, similarly said that holiday sales are poised to rise 4.5% to 5%, exceeding $1.1 trillion from November to January, with holiday e-commerce growth of 14% to 18%, reaching between $144 billion and $149 billion.

  • Coresight Research, meanwhile, estimates a 3.5% to 4% year-over-year rise in U.S. retail sales during November and December, citing consumer confidence and lower gas prices, which could add "as much as an incremental 50 basis points to sales." But Coresight also noted volatility in that confidence amid trade tensions.

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Early prognostications of holiday retail sales are coming in fairly bullish, but some are accompanied by asterisks. 

For one thing, the relatively steep year-over-year climbs are due in part to the disappointment of late last year, and not just to positive macro factors like high employment and rising wages. "Last December, the government shutdown, uptick in consumer savings, and a sharp stock market decline may have led to the lower growth season," according to Daniel Bachman, Deloitte's U.S. economic forecaster.

For another, there are a few factors that, like those that disrupted holiday sales last year, could interfere with the high level of confidence consumers have mostly been demonstrating. One is oft-cited trade tensions, which are making both consumers and retailers wary. And while Coresight called out low fuel prices as helping the consumer, oil prices have become volatile in recent days due to a drone attack in Saudi Arabia.

In a sign that shoppers may be getting skittish, retail sales growth moderated some in August. At the very least, the battle of retail winners versus losers endemic to every holiday season could be all the more pitched this year.

"Holiday sales the past five years have been like a bouncing ball: up one year and down the next. However, just like a bouncing ball, each rise has been lower and lower," Roshan Varma, a director in the retail practice at AlixPartners and a report author. "Therefore, the question for retailers this holiday season is whether they can crowd out all the uncertainty, connect with their customers in an engaging manner and deliver on ROI targets."

Rod Sides, vice chairman at Deloitte LLP and U.S. retail and distribution sector leader, called out "convenience" as "the new retail currency," and said that retailers offering "seamless experiences," ample inventory and speedy fulfillment "are most likely to win this holiday season."

Subscription and resale are among the emerging models that could capture holiday customers' attention this year, according to Adam Pressman, a managing director in AlixPartners​' retail practice. "However, any program or model is only as good as the planning that goes into it, its implementation and its ongoing execution," he said in a statement. "Such efforts should be deployed in a manner where the focus is on the customer and how to message and engage with them in a manner that truly drives value for both them and the retailer."



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