Deloitte Sees Holiday Sales Rising 4.5% as Incomes GainLindsey Rupp
U.S. retail sales may increase as much as 4.5 percent this holiday season, exceeding last year’s gain, as improving incomes and job prospects encourage consumers to open their wallets, according to Deloitte LLP.
Sales, excluding purchases of motor vehicles and gas, may climb to as much as $986 billion in November through January, Deloitte, a New York-based consulting firm, said today in a statement. Holiday sales by that measure rose 2.8 percent last year, according to the company.
U.S. shoppers are poised to increase spending as the decline in the unemployment rate to 6.1 percent makes them feel more secure in their finances. Disposable income adjusted for inflation was up 2.6 percent in the 12 months through July. Yet the slowest back-to-school sales since the recession ended in 2009 have sparked some fears that the holidays also will be sluggish and feature a return of the profit-killing discounts that hurt retailers last year.
“There’s a combination of some real reasons to be optimistic and a psychological glow of people generally feeling better about the economy,” Alison Paul, vice chairman and retail and distribution sector leader, said in an interview. Still, “it will probably be just as promotional as last year in the end.”
Deloitte’s forecast is more optimistic than a projection from AlixPartners, which said last week that sales in November and December may rise as much as 3.8 percent. Joel Bines, the Dallas-based co-leader of the firm’s retail practice, said the holiday season would be “mediocre.”
The Standard & Poor’s 500 Retailing Index has trailed the overall market this year, declining 0.9 percent through yesterday, compared with a 7.3 percent gain for the Standard & Poor’s 500 Index.
Online and mail-order sales may climb as much as 14 percent, Deloitte said. Electronics will likely continue to be the gift of choice for shoppers, while apparel sales may be challenged, Paul said. Clothing retailers selling on-trend styles that can capitalize on their Web presence and physical stores will perform the best, she said.
Shipping companies and retailers are preparing for the increase in online buying by boosting their seasonal labor forces. United Parcel Service Inc. will increase hiring for the period by as much as 73 percent from its peak plan in 2013, when a surge in late e-commerce orders left the company unable to meet holiday deadlines. The temporary workforce will number as many as 95,000 people to handle the rush of packages from October through January, the Atlanta-based company said last week.
Target Corp. expects to hire 70,000 seasonal workers to handle the rush, in line with last year. Wal-Mart Stores Inc. plans to add 60,000 associates for the holidays, about 10 percent more than in 2013.
Digital interactions will influence 50 percent, or $345 billion, of in-store sales this holiday season as shoppers use computers, tablets and smartphones to browse retailers’ sites, research products and compare prices, Deloitte said. Shoppers using devices make a purchase at a 40 percent higher rate in stores than those who don’t, the firm said.
Such increases would be welcomed at mall-based retailers, who saw mall traffic decline 4.2 percent in July and fall 4.7 percent in August, according to ShopperTrak, a Chicago-based research firm. The months are the peak of the back-to-school season, which follows only the holiday period in importance for many retailers. Spending during back to school, which runs through the end of this month, has risen 3.1 percent, missing a forecast for a 3.2 percent gain, according to research firm Customer Growth Partners LLC.
Retailers have a low bar to clear for holiday sales to grow from last year, which was characterized by deep discounts and unusually severe weather.
“I’m rooting for it to be a good holiday season,” Paul said. “It’s a low base from last year for a number of reasons, but people with kids still want to have something under the tree.”