Shoppers will spend more this holiday season, but keep an eye out for a bargain
Sales are expected to rise this holiday season, but retailers may need to offer deals to cash in as shoppers continue their hunt for a bargain.
Retail sales, not counting cars, restaurants and gas, are predicted to rise between 3.6% and 4% during the peak holiday shopping months of November and December, according to The National Retail Federation. That would mean retailers see revenue between $678.8 billion and $682 billion, as compared to the $655.8 billion earned by the industry over the holidays in 2016.
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More consumer confidence in the economy, and an extra weekend day to shop with Christmas falling on a Monday, are key factors in the expected uptick.
But at a time when shoppers can compare prices with the tap of a smart phone, retailers will need to keep an eye on how much their rivals charge since price could make the difference between customers going through with a purchase or taking their business elsewhere.
"People are very price sensitive,'' Matthew Shay, NRF's president and CEO said in a call with media Tuesday, "and this year we expect that will be a critical factor for consumers as they make decisions about their retail spending throughout the holiday season.''
He added that "with the level of transparency that exists in the market today between and among competitors, and the ability for consumers to price shop basically instantaneously. . . lower prices continue to be one of the areas of the most intense completion among retailers.''
The flurry of hurricanes that recently hit parts of the U.S. might also impact sales.
"There will be choices that individuals have to make. especially in the areas that were impacted,'' said Jack Kleinhenz, NRF's chief economist. "They might have to spend more money on renovation, replacement, restoration, and that’s going to take some time. Yet on the other hand the broader economy will still sustain itself.’’
To deal with the holiday crowds, retailers are expected to hire between 500,000 and 550,000 seasonal workers, a slight dip from the 575,000 brought on board in 2016. Target and Macy's are among the store chains that have already revealed their plans, saying that they will hire roughly 100,000 and 80,000 extra employees respectively.
Sales made outside an actual store, from kiosks to e-commerce sites, are expected to increase between 11% to 15% to roughly $140 billion this holiday season.
Online shopping has dramatically disrupted the retail industry, forcing traditional chains to beef up their digital offerings, reinvent their in-store experiences, and in some cases shutter locations. But Shay cautioned that every sale benefits the bottom line.
"Retailers are looking at total sales through all their channels,'' he said noting that seven of the top ten e-commerce sellers are traditional chains like Macy's. "Online is another channel.''