Holiday Sales This Year Will Be Strong — Unless They're Not
Holiday retail sales are predicted to increase between 4.5% and 5% in 2019 compared with the holiday season in 2018, according to a new forecast by Deloitte. That would be an improvement over the 2018 season, when sales were up 3.1% year over year.
Physical retail might not benefit much from the overall growth, however. Deloitte is also predicting an annual increase between 14% and 18% in e-commerce sales for the 2019 holiday season. Last year, such growth came in at 11.2%.
According to the report, the 2019 holiday season increase reflects expectations for consistent growth throughout the season. Last year’s holiday sales came in lower than expected in December, while the 2019 forecast predicts a strong growth rate this December.
The Deloitte forecast excludes auto and gas sales, and for the purposes of the report, the accounting firm includes sales from November to January. So by its reckoning, holiday season sales also include post-holiday clearances occurring in late December and January. Not all calculations of holiday seasons are so broad, with post-holidays sales often considered a separate category.
Consumers are already thinking about holiday shopping, at least, and are optimistic about how much they will be able to spend. According to an online survey by the Harris Poll and OpenX, an advertising tech company, consumers are evenly split on the state of the economy, with just under 50% feeling like the economy is doing better than it was a year ago.
Yet they are optimistic about the future, with more than 70% confident the economy will improve next year, which is a psychological factor in consumer spending around the holidays.
Even so, that isn't necessarily good news for traditional retailers. Harris Poll and OpenX also found that growth in holiday spending is occurring via digital channels, and the majority of the 2,000 consumers interviewed plan to spend more on digital channels this year than they do in stores.
In a note to clients, as reported by Markets Insider, UBS said that other potential problems for retailers this holiday season — besides e-commerce — include the fact that apparel and accessories spending intentions have weakened over the last several months, inventories are high, and tariffs are starting to have an impact on retailers.
The weather and the calendar seem to be against retailers this year as well. October — and in fact the last three months of the year — are forecast to be warmer than usual this year, which tends to suppress holiday shopping.
Also, Thanksgiving is later than usual, cutting six days off the traditional holiday shopping season, which begins the day after Thanksgiving. "This could put pressure on retailers to sell more goods before Black Friday," UBS said in its note.