Independents

NRF: Holiday Retail Sales to Increase 4% This Year

IndependentsOct 04, 2019

NRF: Holiday Retail Sales to Increase 4% This Year

Low unemployment, growing wages and still-strong consumer confidence should provide momentum in the fourth quarter, even as the effects of tariffs loom.

The National Retail Federation is predicting a brighter holiday season for retailers, with sales increasing as much as 4.2 percent over last year, when the government shutdown and stock market volatility put a damper on November and December.

New York—The National Retail Federation said Thursday it expects holiday retail sales to increase between 3.8 percent and 4.2 percent compared with last year.

Consumer spending in November and December is expected to total between $727.9 billion and $730.7 billion, excluding sales of automobiles, gas and at restaurants.

Online and other non-store sales, which are included in the total, are forecast to increase between 11 and 14 percent to as much as $166.9 billion. This would be a substantial increase from $146.5 billion last year.

It’s a somewhat-bullish forecast the NRF backs up by pointing to an economy that is strong overall, though it recognizes that there are several factors that could still dampen the holiday season.

NRF President and CEO Matthew Shay said in a conference call Thursday morning that the fundamentals underlying the economy are positive—low unemployment, growing wages and strong consumer confidence—and will provide momentum in the fourth quarter.

He also noted retail sales have been “very positive” this year, with the three-month moving average up 4.1 percent as of August, and sales the first eight months of the year up 3.6 percent.

The categories expected to do well this holiday season are those that historically do so: apparel, electronics, toys, and gift cards.

“The U.S. economy is continuing to grow, and consumer spending is still the primary engine behind that growth,” Shay said.

“Nonetheless, there has clearly been a slowdown brought on by considerable uncertainty around issues including trade, interest rates, global risk factors and political rhetoric.”

He added the strong consumer confidence they’ve seen could be “eroded” by those issues.

Tariffs are one of the biggest question marks heading into the holiday season, and their effect on spending, whether direct through prices or through consumer confidence, remains to be seen, the NRF said.

RELATED CONTENT: How Tariffs Will Impact the Jewelry Industry
Some merchandise, including jewelry, apparel, footwear and televisions, was subject to new tariffs that took effect Sept. 1, while other products were spared tariffs until Dec. 15.

Retailers are adopting myriad approaches to tackle the issue, and Shay said that while there isn’t one solution they’re finding, they all want to avoid passing costs on to consumers if they can.

“The vast majority of them still see running room and growth opportunity in this economy, and none want to jeopardize that and all are hoping that we’re going to find a constructive
way to address these issues and resolve our trade disputes and move forward.”

A concern Shay brought up during the call was: Do consumers already feel the impact of tariffs? Are they even aware of them?

He said the NRF finds an increasing number of shoppers are aware of the tariffs because of news coverage and the political rhetoric around them.

The NRF often interviews consumers, and Shay said according to recent field research results, up to eight out of 10 consumers surveyed are now concerned about impact of tariffs on prices, which could impact consumer confidence.

Still, at this point, shoppers are in solid financial shape and retailers expect a strong holiday season, NRF Chief Economist Jack Kleinhenz said Thursday.

“Wages look healthy. Inflation is modest. Debt burdens are low and well-managed. Disposable income has been relatively stable,” he said. “As long as employment continues and we have some wage growth, I think that consumers will be confident about spending.”
Brecken Branstratoris the senior editor, gemstones at National Jeweler, covering sourcing, pricing and other developments in the colored stone sector.

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