Record $1 trillion holiday season in offing

By Jackie Crosby - Star Tribune (Minneapolis)

The unofficial start of the holiday shopping season is here.

No longer a one-day dash for doorbusters, retail watchers now count the five days between Thanksgiving and Cyber Monday as the holiday season’s curtain raiser.

If Christmas creep and increased traffic in your neighborhood touches off your inner grouch, consider that retail is America’s largest private-sector employer, supporting one in four U.S. jobs and adding $2.6 trillion to annual GDP.

The upcoming holiday season presents a mixed bag for retailers, analysts say. Consumers feel pretty good about their household finances. Wages have inched up and the unemployment rate is hovering near a 50-year low.

As Target Corp. Chief Executive Brian Cornell told reporters last week: “There is no indicator as we sit here today that the consumer environment is slowing as we enter the holiday season.”

But an undercurrent of uncertainty exists, with hints of a recession and the lingering overhang of tariffs and a trade war. A late Thanksgiving could put pressure on retail growth, and promotions may cut into profits.

As the crucial holiday season gets underway, here are some defining trends and expectations for the coming months.

The outlook

The 2019 holiday could mark retailers’ first ever trillion-dollar shopping season, according to a number of market research firms, including Deloitte and eMarketer.

Deloitte forecasts a bump in sales as high as 5% compared with last year. The nation’s largest retail industry group, the National Retail Federation (NRF), expects consumers to spend an average of $1,048 during the holiday shopping season. NRF’s crystal ball readers predict a 4.2% increase at the high end.

The calendar crunch

A turn of the calendar leaves six fewer shopping days between Thanksgiving and Christmas this year. The compressed time frame could weigh on retailers’ profit potential as it robs them of that extra weekend of potential sales. But consumers could see more deals as retailers compete for dollars.

More than half of retailers surveyed by RetailMeNot and Kelton said they plan to offer deeper discounts than usual. Most began running deals earlier this year.

Bricks and clicks

Brick-and-mortar stores remain the dominant sales channel, accounting for nearly 87% of total holiday spending. But e-commerce will be nearly as significant. Two-thirds of holiday shoppers are likely to buy gifts both online and in stores this year, according to Deborah Weinswig, CEO of Coresight Research.

“Consumers desire frictionless shopping experiences,” she says in a recent report.

Holiday e-commerce sales will rise more than 13% this year, more than three times faster than the total retail growth rate, eMarketer predicts.

‘Free’ shipping

The real battlefront is delivery.

Free shipping trumps fast shipping by a more than 5 to 1 margin, Deloitte researchers found. In fact, shoppers are willing to wait up to seven days to get an item if they don’t feel they’re paying the cost of freight.

But most consumers want it all: free and speedy. And the divide between retailers that have invested in logistics and those that haven’t will widen.

By Jackie Crosby

Star Tribune (Minneapolis)

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