This year’s holiday shopping season should be very merry indeed for online and bricks-and-mortar stores, according to the National Retail Federation.
NRF expects holiday retail sales in November and December — excluding automobiles, gasoline and restaurants — to increase between 4.3 and 4.8% over 2017, reaching a total of between $717 billion to $721 billion. The forecast compares with an average annual increase of 3.9% over the past five years.
“We’re seeing consumer confidence at levels higher than we have seen in two decades,” declares NRF President and CEO Matthew Shay.
“Our forecast reflects the overall strength of the industry,” Shay points out. “Thanks to a healthy economy and strong consumer confidence, we believe that this holiday season will continue to reflect the growth we’ve seen over the past year.”
He adds, “While there is concern about the impacts of an escalating trade war, we are optimistic that the pace of economic activity will continue to increase through the end of the year.”
At an Oct. 3 online discussion, NRF Chief Economist Jack Kleinhenz said, “This has just been a great year. Employment is key, and we have had great growth in employment, and it is broad-based. Disposable personal income is up 5.4%. Saving is almost double what we thought it would be.”
However, Shay remains concerned about the ultimate impact of tariffs on retail sales, calling the tariffs imposed by President Trump a consumption tax on consumers.
Kleinhenz notes that the impact is even broader. “Tariffs can impact the producer, the retailer and the consumer,” he says. It will have a bigger negative impact on small retailers, who make up 90% of NRF membership, because they don’t have the economies of scale that allow them to work around these hurdles, Kleinhenz observes.
Holiday sales in 2017 totaled $687.87 billion, a 5.3% increase over the year before and the largest seasonal increase since the 5.2% year-over-year gain seen in 2010 following the official end of the Great Recession, according to the federation.
“Last year’s strong results were thanks to growing wages, stronger employment and higher confidence, complemented by anticipation of tax cuts that led consumers to spend more than expected,” NRF’s Kleinhenz said.
“With this year’s forecast, we continue to see strong momentum from consumers as they do the heavy lifting in supporting our economy. The combination of increased job creation, improved wages, tamed inflation and an increase in net worth all provide the capacity and the confidence to spend.”
The holiday forecast also is consistent with NRF’s forecast that annual retail sales for 2018 will increase at least 4.5% over 2017.
NRF’s holiday forecast is based on an economic model using several indicators, such as consumer
credit, disposable personal income and previous monthly retail sales. The number includes online and other non-store sales.
At the Oct 3 press conference Kleinhenz also pointed out that the impact of Hurricane Florence on replacement and discretionary spending has yet to be measured.
Retail Employment Grows
Even with the increasingly tight labor market, retailers have been preparing for their busiest season of the year by hiring extra staff to meet the demand expected during November and December.
As part of its forecast, NRF sees retailers hiring between 585,000 and 650,000 temporary workers this holiday season, up from last year’s 582,500.
NRF earlier reported that retail sales and industry job growth remained strong in August, as they have all throughout this year (AA, 9-30-18, P. 4). This strength also is the reason why NRF raised its sales forecast for 2018 to 4.5% over 2017, rather than the 3.8% to 4.4% range it had forecast only months earlier (AA, 8-15-18, P. 5).
Stores, websites and delivery companies have advertised more than 330,000 seasonal job openings so far, the employment firm Challenger, Gray & Christmas reports. That number is expected to double in the coming weeks.
Amazon recently announced that as of Nov 1 it was raising the minimum wage for all of its employees in the United States to $15 an hour.
The new wages will apply to more than 250,000 Amazon employees, including those at Whole Foods, and more than 100,000 seasonal employees it plans to hire for the holiday season. However, the change will not apply to contract workers.
Federal Express announced that it plans to hire 550,000 seasonal employees, while United Parcel Service said it will add about 100,000, and expects 35,000 of them will remain with the company as permanent employees after the season ends.