In case the Christmas music echoing through malls and department stores since the beginning of November weren’t a clue, retailers are super excited about the holiday shopping season. And for good reason—heading into Black Friday all data points suggest that consumers are ready to spend, and not just online.
This will be the first holiday shopping season since last December’s tax law change, for example, giving consumers some extra cash they didn’t have last year. Most organizations also plan on giving bonuses, partly because of strong performance and partly because the tight labor market heightens the need to keep talent happy. Unemployment is at a low 3.7%, and companies are still hiring. Taken together, it is no surprise consumer confidence is at a high level.
“Everything points to a strong holiday season,” says Craig Rowley, a senior client partner with Korn Ferry who specializes in retail. “That’s why retailers started running Black Friday specials earlier than usual this year, because people are shopping.”
But beyond outside forces, many retailers deserve credit for displaying a new level of agility. After a slow start to the year, retail sales have rebounded over the last two quarters, and the strong performance isn’t limited solely to Amazon and other digital-only players. Walmart, Target, Macy’s, and other traditional retailers have all turned in solid earnings in recent quarters. “More and more retailers are better leveraging digital technology to get closer to their customers and targeting them more individually, which is leading to a better experience across media and sales channels,” says Caren Fleit, managing director with Korn Ferry’s Global Marketing Officers practice. “A better customer experience creates more engagement, which creates more revenue.”
The National Retail Federation (NRF) expects the growth trend to continue in the fourth quarter, with estimated holiday retail sales for November and December up about 4.5% over 2017 to roughly $720 billion. Consumers plan to spread their shopping around, with 55% saying they will buy online and in department stores, for instance. The NRF says 50% of consumers who plan to buy products online say they will pick up their purchases in-store. Moreover, Kiplinger forecasts ecommerce sales to grow 15% for the entire year and in-store sales to increase 3.6%, the largest increase since 2014.
Rowley says the data underscores that the winners in retail this holiday season will be those organizations that have put the consumer at the core of what they do, connecting with them online, through social media, and in stores with tailored offerings and promotions tied to what they want. “What consumers lack today is time,” says Rowley. “Editing your merchandise to meet their needs, providing promotions that get them excited, and making it easy to buy is what they want.”
The retailers that can do that best, Rowley says, “are going to like what they find in their stocking Christmas morning.”