Holiday Forecasts: Partly to Mostly Merry

It’s not quite as good as an unexpected gift, but the National Retail Federation (NRF), the Platt Retail Institute (PRI) and FedEx expect shoppers will be spending more during the holidays than last year. How much more is the real question.

FedEx is the most optimistic, as it expects to deliver 13 percent more shipments (280 million) during the holiday season, presumably benefitting from a solid increase in online purchases. NRF is forecasting a 4.1 percent increase and PRI is looking for a gain of 4.4 percent to 4.8 percent on top of last year’s jump of 5.6 percent.

PRI says its forecast is more optimistic than others because unemployment is down vs. year ago, household net worth is up, consumer sentiment has improved, the shopping season is two days longer and the winter in the Northeast is forecast to be colder. Also, spending on big ticket items is up, indicating a return of consumer confidence.

Bloomberg News reports that the consumer sentiment index, as tracked by Reuters/University of Michigan, is at its highest level since the fall of 2007, prior to the Great Recession. Symphony IRI Group’s MarketPulse Q3 study offers a somewhat contrary take with 45 percent of consumers planning to spend less this season.

According to NRF (based on a study of nearly 9,000 consumers conducted by BIGinsight), just over half say the state of the economy will affect how they spend, down about 10 points from last year. Three in ten will do more comparative shopping online and nearly half will look for sales more often. NRF’s survey takers said the most important factor in where to shop is sales/discounts.

Nearly 40 percent of overall shopping will be done online and more than half of smartphone owners and almost two-thirds of those who own tablets plan to research and make holiday purchases via their devices (NRF). Shop.org is forecasting online sales gains of 12 percent versus last year.

NRF sees the lion’s share of spending occurring for gifts with most of those for family. Significant spending will also occur on food, candy, greeting cards, flowers and decorations. Six in 10 shoppers will buy themselves a gift, according to NRF, with the amount spent averaging nearly $140. Younger adults spend even more on themselves. While consumers wish to receive traditional gifts like clothing, books games, etc., the most requested gift is a gift card, which is desired by six in ten.

BrainTrust

Discussion Questions

What is your forecast for the holiday shopping season and why?

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Richard J. George, Ph.D.
Richard J. George, Ph.D.
11 years ago

All indicators appear to support this improvement in holiday shopping. One not mentioned but what I believe to be an underlying current supporting this upward movement is ‘recession fatigue’. For the last 4 to 5 years, consumers have ‘hunkered down’ to deal with the economic realities. Despite some of the uncertainties of the EU crisis, still large unemployment numbers, and the upcoming presidential election, consumers plan to spend on those whom they love.

However, it appears that much of the growth may be limited to online shopping channels, leaving ‘bricks & mortar only’ retailers crying ‘ba humbug’.

Ryan Mathews
Ryan Mathews
11 years ago

It should be a good season — with the possible exception of sales to those who live in Sandy’s path and have other demands on their disposable income.

Why? Because, as I correctly said a year ago, Americans can’t stay on an austerity budget for too long. It’s — well — anti-American not to buy.

Dick Seesel
Dick Seesel
11 years ago

I look for modest increases, but lower than some of the 4% gains in the article. (More like 2-3% is my number.) Macroeconomic conditions are improving and there is usually a relief factor after the uncertainly of a close presidential election. (Unless we have a repeat of 2000!) And individual stores’ numbers — like some of the players in the women’s apparel space — are improving, too.

That being said, there are a couple of wild cards: First, how much will the recovery from Hurricane Sandy hold back retail sales in the Northeast, especially for non-essential goods? Second, will we see a repeat of the “gadget Christmas” of the last few years, driven by dropping prices on tablets instead of other discretionary merchandise?

Gene Hoffman
Gene Hoffman
11 years ago

Holiday sales will be better than expected. Consumers want things and they generally perceive the economy is improving. So they will open their wallets wider.

However, their knowledge of the economy has its origins in their own individual perceptions, which are affected by numerous things. A possible hurdle to improved holiday sales could be the perception of what possible damage and additional expenses Sandy will have on their daily lives.

Ben Ball
Ben Ball
11 years ago

It is nice that the retailing community is forecasting some improvement in holiday sales. Perhaps the intended self-fulfilling prophesy will indeed be fulfilled.

But I note most of the commentators so far are “cautiously optimistic with a liberal dose of caveats” — and with good reason. Consumers are not better off, more optimistic nor are more of them actually employed than in recent years. The best reason to expect improved sales this year is what Dr. George termed “recession fatigue”.

And to piggyback on Ryan’s comment, Americans are simply tired of not buying all the stuff they want. We like to spend, and we have clearly had the capacity to spend more during the recession than we did — witness the fact that we were steadily retiring debt instead. But we are tired of it. The problem with this economy is primarily attitude, both with business and with consumers. Hopefully they will have reason to change that attitude soon.

Cathy Hotka
Cathy Hotka
11 years ago

We’ve seen a steady uptick for the last several years. And if, by some miracle, the Congress decides to address budget issues to draw us away from the fiscal cliff they created, we’ll be treated to even more robust growth.

Camille P. Schuster, Ph.D.
Camille P. Schuster, Ph.D.
11 years ago

Those in the wake of Sandy’s devastation may be spending their money on repairs. If consumer confidence stays high and jobs continue to increase, holiday sales should be strong. However, these consumers will be cautious about how and when they spend their money. Comparative shopping tools will be in full force.

Ed Rosenbaum
Ed Rosenbaum
11 years ago

I can forsee modest increases in holiday spending. It’s time we looked forward not back. I can also see why FedEx expects significant increases. Why should’nt they with the expected increase in online purchases?

Ralph Jacobson
Ralph Jacobson
11 years ago

Based upon how jam-packed all of the malls have been in and around Los Angeles, in all income levels of neighborhoods, my view is encouraged by this traffic. I think there are parts of our economy that are recovering now. Housing starts and resales, general strength of the stock market with many retailers and CPGs hitting all-time or multi-year highs, are evidence of an eventual return to prosperity. Things are looking up. We’ll all see if the election has any bearing on this.

Tony Orlando
Tony Orlando
11 years ago

I see about a 2-3% drop from last year, because our county continues to bleed good jobs. Welfare is at an all time high, and the folks just will not spend like in years past. Throw in the dollar stores, Walmart, and the limited assortment grocers, and you have a real battle to deal with. Our deli-bakery will do well, and some specialty meats as well, but the center-store is always a huge challenge.

Areas with money, or government jobs will do better than last year, and if and when things get better, then maybe things will turn around for our area as well. Either way, I’ll get through it as always, and be prepared for next year, so Happy Holidays to all.