U.S. Consumer Sentiment Bodes Well For Holiday Sales

NRF Projects Rise of 3.7 Percent over 2014; All Eyes on Black Friday

According to a recent NPD Group survey of 3,600 adults, U.S. shoppers are looking forward to the winter holidays this year. Eager to catch a break from “what’s going in the world” and wanting “to give to the less fortunate” are the main reasons given for the positive sentiments. Whatever’s behind their holiday outlook, 15 percent of those surveyed plan to spend more than last year and 16 percent plan to spend less (down from 20 percent in 2014). That’s the smallest gap between the two groups in the last three years. The glass looks half full as we head into the make-or-break season, and as a leader in retail real estate, we’re watching for the opening salvo – Black Friday – and what it might indicate for the final stretch of 2015.

Modest Rise in Holiday Sales Projected by Major Retail Trend Watchers

After a sluggish 2015, will retailers get a rush of spending in the year’s closing weeks? The National Retail Federation has projected an increase of 3.7 percent, totaling $630.7 billion in sales for November and December and slightly below last year’s 4 percent advance. Deloitte LLP is more optimistic, predicting an upward tick of “as much as” 4 percent. Alix Partners’ view is more sober at 2.8 to 3.4 percent. Whichever number eventually materializes, it seems that the retail trend toward bargain-hunting will continue, with buyers as the ultimate winners.

“Americans remain torn between their desire and their ability to spend. The fact remains that consumers still have the weight of the economy on their minds,” said NRF President Matthew Shay. Despite low energy prices and a strengthening job market, the economy is not in full recovery and not all boats have been lifted by the rising tide. Stagnant hourly wages at the lower end of the economic spectrum have restrained a substantial segment of consumers.

PwC describes today’s shoppers as divided into two groups: “survivalists” and “selectionists.” The border between the two is a household income of $50,000. Those below that mark will seek bargains this holiday season, planning to spend $631 less than last year. Those above, who are planning to boost seasonal spending by $1,331, will gravitate toward personal electronics and experiences (travel and entertainment). But, because of the power of the Internet, shoppers in both groups will be able to search for and find the best deals for almost everything on their wish lists, using dozens of websites with up-to-the-minute news on Black Friday specials.

Once a Retail Trend, Now a Retail Institution, Will Black Friday Bounce Back from 2014s Fall-off?

The winter holidays are a crucial season for many retailers, with the major chains dependent on November and December activity for as much as 30 percent of their annual sales. Black Friday, the unofficial opener to the season, holds special significance. A consistent winner for the past dozen years, Black Friday’s sales fell off 11 percent in 2014, with four-day total sales of $50.9 billion, down from $57.4 billion in 2013. This includes both in-store and online.

Amazon Will Open the Season on November 1, But Wal-Mart Will Finish on Top

No retailers are waiting for the day after Thanksgiving to launch holiday promotions. First out of the gate on November 1 will be Amazon with its “Countdown to Black Friday” promotion. From there, the frenzy will continue, peaking on Black Friday but continuing through the holiday weekend before slipping into online’s own Cyber Monday.

If Black Friday itself turns in a disappointing performance, trend watchers say, it will likely be the result of a time frame that has stretched from one day to two to now a full month. BestBlackFriday.com, a website that tracks seasonal retail activity, predicts that Friday sales will slip 3.3 percent to $8 billion. Thanksgiving Day will get a bump of 18.8 percent. Together, the two days will see online sales up 33.3 percent from 2014.

As Black Friday 2015 becomes retail history, promotion will continue to surge from Cyber Monday to Green Monday (the second Monday in December), all the way to the final holiday shopping week, when in-store sales are expected to spike. At the season’s end, retail watchers predict, Wal-Mart will emerge the big winner. Its multi-channel strategy includes their one-hour in-stock guarantee policy, online exclusives on a powerful website, and irresistible in-store pricing on the hottest holiday items.

Interested in more trends and predictions for Black Friday, visit: http://www.twice.com/news/statistics/top-10-black-friday-2015-predictions/58759.

Outlook on Holiday Retail Sales is Optimistic

But Analysts Present a Mixed Picture of How Robust the Increase Will Be

After a tepid back-to-school season and with Black Friday just weeks away, all eyes in retail, including retail real estate, are fixed on analysts’ predictions for 2014 holiday spending. The majority of the announcements are cause for good cheer, with major forecasts from such sources as the bellwether National Retail Federation (NRF), pointing to healthy increases over the 2013 season. The question seems to be not whether there will be a spike in sales, but how much of a rise we can expect.

In General, a Bright but Mixed Picture of Crucial Retail Holiday Season

The National Retail Federation predicts that 2014 holiday sales will increase 4.1 percent for a total of $616.9 billion. That’s a full percentage point ahead of 2013’s gain and well above the ten-year average annual rise of 2.9 percent. Jack Kleinhenz, the trade organization’s chief economist, cites increases in employment, disposable income and the number of shopping days in this year’s calendar among the contributing factors. But don’t pop the champagne corks prematurely. The Wall Street Journal observed that the NRF’s forecasts have failed to match actual sales for the past six years. Other major retail analysts, however, mirror the NRF’s outlook for the upcoming season.

In September, Deloitte predicted a rise of 4 to 4.5 percent in holiday sales, which would be the biggest increase in at least three years. Alison Paul, Deloitte’s vice chairman and retail distribution section leader, said in a widely quoted interview that there is “a psychological glow of people generally feeling better about the economy” as a result of increased employment and rising personal income.

AlixPartners delivered an even more optimistic vision of the holiday ahead, predicting an increase in sales of as much as 4.9 percent. Like Deloitte and the NRF, they cited the improving economy, including falling gas prices and unemployment rates, as the reasons why shoppers can be expected to open their wallets wider this year.

Prosper Spending Score, based on their recent consumer survey, sees an 8 percent leap from 2013’s levels. The engine driving their outlook is feedback from upper-income households ($75,000+ per year) who maintain a spending score that is 13.2 percent higher than the overall average. Of interest to the retail real estate market is Prosper Spending Score’s predictions about the performance of individual retailers. According to their consumer research on 150 retailers, Gap, Amazon, Macy’s and Nordstrom are among those expected to be top holiday performers.

PricewaterhouseCoopers Says Cash-Strapped Consumers Point to Sales Drop

The sole dissenter among the major analysts is PricewaterhouseCoopers, who has predicted that average household holiday spending will drop by 6.9 percent from last year’s levels for an average outlay of $684 in 2014. Their projection is based on a poll of 2,200 U.S. consumers, who, in spite of a stable level of inflation, cited concerns over rising costs in food, transportation, housing and health care as motivators to cut their holiday spending. “The consumer doesn’t believe the economy has necessarily improved,” said Thom Blischok, chief retail strategist of PwC’s Strategy& unit (formerly Booz & Co).

There’s Agreement on One Thing: Online Looks Bigger Than Ever

The forecasters seem to be of a single mind about one thing for the 2014 holiday season: online will continue to be the star performer. Deloitte projects a spike of as much as 14 percent in online and mail-order sales, while Shop.org predicts an increase of between 8 and 11 percent. That’s good news not only for online retailers but for shipping companies like UPS, who is expecting to hire as many as 95,000 temporary employees. Total seasonal retail hiring is anticipated to range from 725,000 to 800,000.

But online shopping isn’t the only role electronic devices will play. Digital interactions will influence 50 percent of in-store sales as savvy shoppers research products and compare prices via their computers and mobile devices. Retailers are responding by optimizing their websites for mobile platforms and supplying their sales associates with tablets for in-store customer support.

Gift cards will continue to be top sellers and the most popular gift category will be electronics. Apparel sales may lag except among those retailers with a trendy inventory supported by a strong web presence.

Despite Solid Outlook, NRF Advises Retailers to be Cautious

The most wonderful time of the year may be about to arrive, but retailers are still advised to be aware of consumers’ continued price sensitivity. “Recognizing the need to keep household budgets in line, we expect shoppers will be extremely price sensitive as they have been for quite some time,” said NRF President and CEO Matthew Shay. “The lagging economy, though improving, is still top of mind for many Americans.” He advises retailers to respond by “differentiating themselves and touting price, value and exclusivity.” Promotions, though perhaps not as prevalent or as deep as last year, will continue to play a role.

What do Retailers Think About Holiday 2014? Levin Survey Looks for Answers

Levin Management is one of the retail real estate companies that conducts regular surveys of tenants in their shopping centers. Our annual Pre-Holiday Retail Sentiment Survey is currently in progress and we expect to release the feedback in mid-November. Key findings will be published here.