Will retailers find gold or coal in their holiday stockings?

Discussion
Source: Walmart
Oct 06, 2016
George Anderson

It’s that time of year again when groups go public with sales forecasts for the Christmas selling season. Two of the most anticipated reports of this kind — issued by the National Retail Federation (NRF) and the International Council of Shopping Centers (ICSC) — are out and predicting merry holidays for retailers that have all their marketing P’s in place.

NRF expects sales in Nov. and Dec. to increase 3.6 percent year-over-year, “significantly higher” than the 2.5 percent average over the past decade and slightly higher than the 3.4 percent averaged over the past seven years.

“All of the fundamentals are in a good place, giving strength to consumers and leading us to believe that this will be a very positive holiday season,” said Matthew Shay, president and chief executive of NRF, in a statement. “This year hasn’t been perfect, starting with a long summer and unseasonably warm fall, but our forecast reflects the very realistic steady momentum of the economy and industry expectations.”

“We remain optimistic that the pace of economic activity will pick up in the near term,” Mr. Shay added.

ICSC is forecasting sales at physical stores will increase 3.3 percent for this year’s holiday season versus 2.2 percent in 2015. The trade group expects retailers with a physical and digital presence to outperform those that only operate stores.

“Throughout 2016, consumers have demonstrated a tendency to shop across both digital and physical retail. Even shoppers who purchase online favor retailers with a physical presence and an increasing number of consumers are buying online and collecting in stores,” said Tom McGee, president and CEO of ICSC. “Consumer intentions show that this digital/physical convergence will be critical for the health of the industry as we close out the year.”

According to ICSC, 85 percent of shoppers will conduct research online before shopping in stores this holiday season and 39 percent will take advantage of click and collect services, up from 32 percent in 2015. Importantly, 83 percent of click and collectors will make additional purchases while in the store.

DISCUSSION QUESTIONS: What is your forecast for the 2016 Christmas selling season? How big a role will cross-channel capabilities play in sales performance this year?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Retailers should consider their store traffic as a precious, non-renewable resource. Don’t count on be-backs."
"The election’s ending will have more impact than personal income. Elections take a lot of energy and positive attitude out of shoppers."
"Although it is very early, with the low unemployment and the continued growth and low price of oil, we can expect a robust holiday season."

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14 Comments on "Will retailers find gold or coal in their holiday stockings?"


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Mark Ryski
BrainTrust

While the NRF is optimistic by nature, retailers should be careful to not get complacent. There has been a persistent softening of store traffic in 2016 and there’s no evidence to suggest this will change for Christmas — despite the positive economic indicators. Retailers should consider their store traffic as a precious, non-renewable resource. Don’t count on be-backs. Focusing efforts on fast transaction processing, aligning staff to traffic and in-store conversion is key. As is almost always the case, the retail winners this holiday season will be the ones that execute the basics consistently and effectively.

Dick Seesel
BrainTrust

If somebody tracked the annual NRF holiday forecast compared to actual results, I think they would find that this trade organization is consistently too optimistic. I feel the same way about their 2016 number.

And does their number include surging growth by e-commerce retailers, especially Amazon, or strictly brick-and-mortar and multichannel retailers like Macy’s? There isn’t much evidence from the numbers we’ve seen all year (especially from mid-tier retailers) to expect a sudden surge in demand. Some retailers have especially easy comparisons to 2015 (which will help), but I’d be pleasantly surprised to see numbers beyond the 2 to 3 percent range.

Ron Margulis
BrainTrust
Perhaps like never before, sales for this holiday season will depend on the outcome of the election next month. If Trump is elected, people at the top and bottom on the income scale will be celebrating for very different reasons. The 1 percenters can expect a nice tax break going forward and so may be more inclined to spend a little extra. The lower income group that has supported Trump for the last year may also rejoice with a few extra baubles under the tree. The rest of the population will likely pull back on spending in anticipation of what they perceive as the dour economic consequences of the election. Net-net for a Trump win is no growth in sales for the season and perhaps a slight decrease from last year. If Clinton is elected, there will be more spending by the extended middle of the income spectrum (25 percent to 95 percent) and slightly less from the least well off. The 1 percenters will still spend, but perhaps not as ravenously as they would… Read more »
David Livingston
Guest
3 years 15 days ago

I don’t care what the experts say or listen to cowardly excuses such as a warm fall. The bottom line is the economy is always good all the time for good retailers. If a retailer doesn’t have a great holiday season it’s because they are not good at what they are doing and are getting what they deserve. Cross-channel capabilities will of course play a major role. The winners in that area will be the ones who keep it simple. Too many clicks means too many online carts lost in cyberspace.

Tom Redd
Guest

Heck, I do not care about how optimistic the NRF is — they are close to right. The elections will be over and just that makes Christmas and most elements of every religion happier. The election’s ending will have more impact than personal income. Elections take a lot of energy and positive attitude out of shoppers. When they are over most Americans adjust by bird day and are ready for more vacation and Christmas break.

Also, more retailers have gotten their multichannel games in gear and are well past mid-field so they are hiring fewer add-ons for in-store, but are ramping up distribution centers. Amazon will have its few weeks of glory and I estimate that with the holiday Prime mass-streaming they have this year that their systems will crash at least once in a specific region.

I am also confident that I will get what I ask for on Christmas. Otherwise I will stomp and scream!

“Christmas with the Redds” — a new show coming out later this Fall!

Shawn Harris
BrainTrust

Retailers should look at last year as a turning point, where more shoppers chose online vs. offline on Black Friday 2015. This means they should go leaner on in-store inventory (don’t worry, the majority of shoppers will start with your website anyway), ensure their websites can truly dynamically scale to meet load, use broadcast media to create theater and excitement in combination with personalized targeted ads on social platforms, and deliver what they say they will deliver.

Doug Fleener
Guest

I think the most interesting forecast so far has come from Deloitte. They predicted a 3.6 percent to 4 percent increase. It was where they believed the pressure and winners will come from that stood out.

From the forecast: “‘Retail competition will not only come from the big box down the street or major e-commerce players,’ Sides noted. ‘It is also likely to come from the small and midsized retailers that focus on niche products and experiences.'”

I absolutely believe that’s the case. Shoppers shop both logically and emotionally during the holidays. The retailers that can connect emotionally with the holiday consumers will be in a better position to compete with the online convenience and the low doorbuster (or more appropriately termed, margin-buster) pricing of the big boxes.

Brian Kelly
Guest
3 years 15 days ago

I think the NRF ought to be pounding the POTUS candidates for specific plans to address wage stagnation and the loss of jobs because unless the U.S. shopper isn’t given a pay increase next Holiday, 2017, will remain flat too.

The recent Census data was proven to be unreliable for predicting national retail sales as the reality was improvements were very regional. To the best of my knowledge, no other economic report has emerged to indicate the majority of U.S. shoppers are better off than a year ago.

Cross-channel capabilities is not a high tide to raise all boats. These tactical efforts will shift share as those retailers simplifying the lives of shoppers while saving them money will gain consideration and share if they deliver upon their promise.

I think holiday (the nine weeks of November and December) will be up 1.5 percent. I wish it were more.

As we say, “retail ain’t for sissies!”

Ralph Jacobson
BrainTrust

I think this holiday period will be a strong season for retailers, however I believe there will be more variance across metropolitan areas in the U.S. than in recent years. Certain cities are seeing stronger retail recovery than others. Retailers shouldn’t assume the same forecast across the country. We may actually see dips in growth in depressed regions. Online shopping will indeed be the great equalizer, both regionally as well as for smaller retailers versus the giants. Online allows small players to “punch above their weight.”

Adrien Nussenbaum
Guest
Adrien Nussenbaum
U.S. CEO and co-founder, Mirakl
3 years 15 days ago
The estimates of growth are encouraging — the real question is, which retailers will enjoy the growth and which ones will be left out? Today’s customers are empowered. They are accustomed to shopping experiences with the convenience of Amazon, where a marketplace of third-party sellers creates a virtually endless aisle of products at competitive prices with a high quality of service. A new generation of pure-play retailers has emerged to dominate in categories once owned by physical retailers. Companies like Farfetch and Lyst in fashion, Etsy in handmade goods and Newegg in electronics have succeeded via the marketplace model. There is no reason to think they will not continue to grow throughout the holiday season and build upon their existing success. For any omnichannel business, one key to success will be complementing the in-store experience — one that these new pure-play retailers cannot match — with a compelling online experience that meets the expectations of today’s customers. Giving customers the broad array of product choices they expect from your brand is key to delivering great… Read more »
Roger Saunders
Guest
We’re all handicappers at this time of year, as the consumers are out of the paddock and at the post. My tip sheet says follow the NRF’s lead. They have a solid and useful benchmark number that reflects where consumers are trending, as opposed to too many others who are using hunches or the rear view mirror. Your windshield is big, your rearview mirror is small. There’s a reason. It will be important to follow and anticipate the segments that are most meaningful in delivering year-over-year gains. If your target is the 79 million Millennials, don’t look at them in bulk. Break them down into 4 or 5 segments that can be targeted on their path to purchase. I like married Millennials who are 31.5% of the generation at this stage. More money with two income households, some with kids, saving like demons for holidays, evolving and looking like Married Gen X, high consumer confidence, shifting housing patterns, make them track ready. If the target is a market with household income of $35,000 to $50,000,… Read more »
Kai Clarke
BrainTrust

Although it is very early, with the low unemployment and the continued growth and low price of oil, we can expect a robust holiday season. Perhaps the most important indicator will be the black Friday and black Monday dynamic, which should both set records this year. Our visions should be inclusive of the online and brick and mortar retailers.

Jenn Markey
Guest
3 years 15 days ago

Digital is a powerful way to connect with shoppers. According to Google, 75% of shoppers that get helpful local search results are more likely to visit your store and that 60% of folks start shopping on one device, but continue or finish on another. So the big winners this holiday will be those retailers and brands that engage with customers across all channels and flawlessly execute a consistent and positive shopping experience across same.

And this is no small feat! Today’s socially engaged and aware shoppers are more empowered than ever with competitive pricing, ratings, reviews and a multitude of other data points at their fingertips. This makes them uber quick to go elsewhere if their expectations aren’t being met.

So this holiday, it’s more important than ever for retailers and brands to be as informed as their shoppers in terms of who is selling what, where, when, and for how much to deliver that seamless cross-channel experience.

Ken Morris
BrainTrust
Ken Morris
Retail industry thought leader
3 years 15 days ago
The holiday sales forecasts from NRF seem pretty optimistic. I hope they are right. The final results may depend on how well retailers promote deals, the timing of those promotions and how well they execute on omni-channel services. Last holiday season, many retailers had missteps when trying to execute flexible delivery/pick-up options. According to a post-holiday study, 60% of click-and-collect orders placed on Cyber Monday had problems. The good news is that many retailers are taking this seriously and are making unified commerce a priority this year. According to the 2016 POS/Customer Engagement Survey, 85% of the respondents indicate that unified commerce is their top priority. Many retailers have taken the “just get something done” approach to deliver a seamless customer experience that transcends channels. The unfortunate result of this quick fix approach is a “faux” omni-channel model that doesn’t execute as promised and has the risk of disappointing customers. While 60% of retailers indicate they have implemented “inventory visibility across channels,” 80% of those retailers indicate that the system “needs improvement.” The ISCS consumer… Read more »
wpDiscuz
Braintrust
"Retailers should consider their store traffic as a precious, non-renewable resource. Don’t count on be-backs."
"The election’s ending will have more impact than personal income. Elections take a lot of energy and positive attitude out of shoppers."
"Although it is very early, with the low unemployment and the continued growth and low price of oil, we can expect a robust holiday season."

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