Will holiday 2019 be naughty or nice?
Despite the less-than-ideal backdrop of tariffs, the trade war and signals portending a recession, the upcoming holiday selling season should reflect solid growth relative to 2018’s modest performance, according to data from Deloitte.
The consulting firm forecasts a 4.5 percent to 5 percent sales increase for holiday 2019, which could generate $1.1 trillion. Last year’s holiday drew $1.09 trillion, per U.S. Census Bureau data, and sales improved 3.1 percent over the same frame in 2018. AlixPartners’ forecast also calls for a similar growth increase of 4.4 percent at the low end and a high of 5.3 percent for the year-end frame.
As usual, digital retail is expected to drive much of this growth. E-commerce should increase 14 percent to 18 percent versus the 11.2 percent rise in 2018, with online and mobile sales pulling $144 billion to $149 billion for the upcoming holiday period. Last year online sales improve 11.2 percent to reach $126.4 billion.
Daniel Bachman, Deloitte’s U.S. economic forecaster, said, “The projected holiday season growth is, in part, due to the current health of the labor market. Near record-low unemployment rates, coupled with continued monthly job creation, may encourage people to spend more during the holiday season.”
The economy is still growing, albeit at a slowing rate, Bachman noted. And this year’s holiday season probably won’t see a higher consumer savings rate take effect as it did last year due to the partial U.S. government shutdown, he said.
Rod Sides, Deloitte’s vice chairman and leader of the U.S. retail and distribution sector, said, “We’ve seen retailers continue to improve customer experience, invest in the fundamentals and leverage relationships with innovative startups to boost engagement and efficiency. But, convenience is the new retail currency [and] retailers who offer seamless experiences, have products available, and can deliver items more quickly than ever are most likely to win this holiday season.”
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While there’s “unprecedented uncertainty” due to on-again, off-again tariffs and hand-wringing over recession fears, Joel Bines said AlixPartners is advising clients to be nimble, adding that the “best course to set is one that includes a strong cost control and flawless execution.” Bines is the global co-leader of AlixPartners’ retail practice.
Roshan Varma, a director in the retail practice group at AlixPartners and a contributor to 2019’s holiday forecast, said, “Holiday sales the past five years have been like a bouncing ball: up one year and down the next. However, just like a bouncing ball, each rise has been lower and lower. Therefore, the question for retailers this holiday season is whether they can crowd out all the uncertainty, connect with their customers in an engaging manner and deliver on [return on investment] targets.”