Blue Christmas: Will retailers have a cheerful holiday season?
The holiday season is the most lucrative time of the year for the retail industry, but sales growth is predicted to falter in 2015. Many sources, including the National Retail Federation, analytics firm RetailNext, market research firm NPD, and consulting firm AlixPartners, believe year over year holiday sales growth will shrink in comparison to 2014.
Holiday sales are categorized as all sales in November and December excluding autos, gas, and restaurant sales.
According to the Census Bureau, sales growth in retail and food services grew only 0.1 percent in September and was revised down in August from an increase of 0.2 percent to zero increase.
The National Retail Federation has the brightest outlook for holiday sales and predicts an increase 3.7 percent over last year. This is down from last year’s 4.1 percent sales growth and slightly below the 3.9 percent average growth of the past five years.
The recently volatile nature of the stock market, little to no wage growth, and a slow rate of job creation have caused consumers to curb any extra spending. Matthew Shay, the president and CEO of the National retail Federation said: “Potential disruptions from yet another government shutdown in mid-December, and a slower pace of job creation and income growth are just a few key factors that will impact holiday shoppers’ spending this year.”
A significant slowdown in holiday spending could be disastrous for an industry that derives a large chunk of its revenue from the last two months of the calendar year. A poor showing in the critical months of November and December does not leave retailers with any time to implement a recovery strategy or adjust expectations before the year ends and earnings releases must go out to investors.
Will a gloomy economic outlook scare consumers away from holiday shopping? Should retailers consider lowering prices in an attempt to draw in more holiday shoppers?Feel free to leave a comment or find me on Twitter @Andrew_Morse4