Will retailers find gold or coal in their holiday stockings?




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.
- National Retail Federation Forecasts Holiday Sales to Increase 3.6% – National Retail Federation
- ICSC Forecasts 3.3 Percent Growth this Holiday Season – International Council of Shopping Centers
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?
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14 Comments on "Will retailers find gold or coal in their holiday stockings?"
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Founder, CEO & Author, HeadCount Corporation
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.
Principal, Retailing In Focus LLC
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.
Managing Director, RAM Communications
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.
Global Vice President, Strategic Communications, SAP Global Retail Business Unit
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!
Board Advisor, Light Line Delivery
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.
President and Managing Partner, Sixth Star Consulting
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.
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!”
Global Retail & CPG Sales Strategist, IBM
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.”
U.S. CEO and co-founder, Mirakl
Global Managing Director, Prosper Business Development
CEO, President- American Retail Consultants
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.
VP Marketing
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.
Managing Partner Cambridge Retail Advisors