With Halloween done and dusted for another year, the lead-up to the traditional holiday season begins in earnest – as do the retail sales predictions. A clutch of surveys are predicting that holiday retail sales could be up by more than five percent in the US this year, despite a growing gap among retailers between winners and losers. Meanwhile British buyers are less likely to splash out, thanks to continuing Brexit uncertainty and a likely mid-December general election.
American shoppers say they will spend an average of US$1,047.83 during the holidays, up four per cent on last year, according to the annual survey by the National Retail Federation (NRF), released this week.
This concurs with the NRF’s annual holiday spending forecast, which takes into account a variety of economic factors to project overall spending rather than per-consumer spending. It estimates that holiday retail sales in November and December will be up between 3.8 percent and 4.2 percent on 2018 (a total of between US$727.9 billion and US$730.7 billion).
Other observers, such as Deloitte, are even more bullish about US holiday retail sales, saying they could climb to five percent.
Global consulting firm AlixPartners predicts holiday sales growth of 4.4 per cent to 5.3 per cent. But it warns there’s still “unprecedented uncertainty” over headwinds like the US-China trade war and the threat of another economic slowdown.
“Consumers are in good financial shape and willing to spend a little more on gifts for the special people in their lives this holiday season,” says NRF President and CEO Matthew Shay. “Retailers are fully prepared to meet the needs of holiday shoppers looking for that perfect mix of sales, quality and selection.”
However Shay admits there is an increasing chasm between the winners and losers in the retail industry ahead of this holiday season. This follows a recent slew of bankruptcy filings including big names such as teen apparel retailer Forever 21 in early October, and luxury department store chain Barneys New York in August.
Store closures in the US are set to eclipse a record this year. Coresight Research estimates that 12,000 stores could close across the country this year – far above 2018’s record losses of more than 5,800 sites.
While stores like Target and Walmart are expecting a strong holiday season, mall-based apparel retailers like Gap and Victoria’s Secret owner L Brands are struggling to draw shoppers into stores without having to use heavy discounting and flash sales that weigh on profits.
“It’s getting a little more challenging out there,” Shay admitted to CNBC.com earlier this month, adding that the retail industry isn’t seeing “universal growth.” The winners, he said, are the ones investing in their supply chains and making shopping as convenient as possible.
But things are more gloomy across the Atlantic, where Brexit fears and a general election are set to “adversely affect” British retailers this Christmas, says a new survey.
The UK’s Centre of Retail Research (CRR) annual Shopping for Christmas report says British retail sales for holiday spending year-on-year will be among the lowest out of seven EU countries for which forecasts have been made. Only Italy is expected to perform worse than the UK.
Spend in the UK this Christmas is set to rise by 0.8 percent compared to 2018, with total spend for the festive period is estimated to be £80.27 billion.
The report defines Christmas spending as retail sales occurring in the six weeks from the middle of November to the end of December. The research covers all key shopping dates in the festive shopping season, including Black Friday and Cyber Weekend, Singles Day, and the Boxing Day sales.
“The biggest issue is a no-deal Brexit,” the report states. If no agreement is reached, and lorries get stuck at ports in the chaos, “economic life [will suffer] immediately”. If this happens, it warns, the growth in retail sales could plummet to a mere 0.2 per cent.
The report, which was released on October 18, predicts that consumer confidence may be further dampened should a general election be held prior to Christmas, leading to reduced spending.