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Holiday Sales Forecasts Are Rosy, but Not for All Retailers
NRF predicts sales will rise more than last year, but much of the growth expected to come from ecommerce
Black Friday shoppers walk through the Menlo Park Mall in Edison, N.J., on Nov. 25, 2016. PHOTO: MICHAEL NAGLE/BLOOMBERG
By Sarah Nassauer
Oct. 3, 2017 12:39 p.m. ET
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Sales overall are likely to be strong over the winter holidays, buoyed by low unemployment and rising stock markets that help high-income shoppers feel flush, according to several retail industry groups and consultants.
However, the dynamics challenging the industry will persist during the busy shopping season, as competition among retailers remains fierce and more shoppers buy online. Several big chains such as Toys ‘R’ Us Inc. have filed for bankruptcy protection this year, while others like Macy’s Inc. and Sears Holdings Corp. have closed hundreds of weaker stores.
On Tuesday, the National Retail Federation said it expects holiday retail sales, which excludes autos, gasoline and restaurants, to increase between 3.6% and 4% in November and December, up from $655.8 billion last year.
The trade group’s forecasts haven’t always matched results, Last year, holiday spending fell in line with the group’s 3.6% growth forecast, but in 2015 the results were well short of the NRF’s prediction of a 3.7% gain.
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Christmas falls 32 days after Thanksgiving this year and is on a Monday, not a Sunday, which gives shoppers an extra weekend to shop, said the NRF, whose members include traditional chains such as J.C. Penney Co. and Dick’s Sporting Goods Inc. as well as Amazon.com Inc. and online merchants.
“Over all, the industry is very strong,” Matthew Shay, NRF chief executive said on a call with reporters. “Brick and mortar is getting better and more effective online.”
The NRF’s rosy outlook is in line with other predictions from consultants. Deloitte expects retail sales during November through January to rise 4% to 4.5% compared with last year. AlixPartners predicts an increase of 3.5% to 4.4% and RetailNext Inc. expects a 3.8% increase.
As in recent years, e-commerce will drive a good portion of the growth, especially as chains have closed hundreds of weaker stores. Deloitte expects online holiday sales to rise 18% to 21% compared with a year ago. NRF predicts nonstore sales will rise 11% to 15% to around $140 billion.
But there will be winners and losers, as there have been throughout retail this year. “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’s retail practice.
While wages are rising, shoppers are weighed down by higher cost for some expenses like health care, especially low-income shoppers, noted Kantar Retail. Kantar expects fourth-quarter sales growth of 3.7%, compared with 2.9% last year.
“We are going to increasingly see this bifurcation across income lines,” said Doug Hermanson, principal economist at Kantar. Upscale and value-based retailers should be at an advantage this holiday season given the widening divide, he said.
The NRF expects the retail industry to hire fewer seasonal workers than last year. It predicts 500,000 to 550,000 temporary workers will be added, down from 575,000 last year.
—Suzanne Kapner contributed to this article.
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