Getty Images
Mhlnews 10489 Holiday Retail Sales 1

Retailers Expect Strong Holiday Sales

Oct. 5, 2018
Full employment, tariffs could create challenges for stores and their supply chain partners.

The National Retail Federation announced that it expects holiday retail sales in November and December—excluding automobiles, gasoline and restaurants—to increase between 4.3% and 4.8% over 2017 for a total of $717.45 billion to $720.89 billion.

The forecast compares with an average annual increase of 3.9% over the past five years and is consistent with NRF’s forecast that annual retail sales for 2018 will increase at least 4.5% over 2017. NRF’s holiday forecast is based on an economic model using several indicators including consumer credit, disposable personal income and previous monthly retail sales. The number includes online and other non-store sales.

“We’re seeing consumer confidence at levels higher than we have seen in two decades,” says Matthew Shay, NRF’s president and CEO. “Our forecast reflects the overall strength of the industry. Thanks to a healthy economy and strong consumer confidence, we believe that this holiday season will continue to reflect the growth we’ve seen over the past year.”

He adds, “While there is concern about the impacts of an escalating trade war, we are optimistic that the pace of economic activity will continue to increase through the end of the year.”

NRF’s chief economist Jack Kleinhenz said at an October 3 press conference, “This has just been a great year. Employment is key, and we have had great growth in employment, and it is broad-based. Disposable personal income is up 5.4%. Saving is almost double was what we thought it would be.”

Shay remains concerned about the ultimate impact of tariffs on retail sales, however, terming the tariffs imposed by President Trump as a consumption tax on consumers. Kleinhenz stresses that the impact is even broader. “Tariffs can impact the producer, the retailer and the consumer,” he says. However, he notes, it will have a bigger negative impact on small retailers, who make up 90% of NRF membership, because they don’t have the economies of scale that allow them to work around these hurdles.

Holiday sales in 2017 totaled $687.87 billion, a 5.3% increase over the year before and the largest increase since the 5.2% year-over-year gain seen in 2010 after the end of the Great Recession, according to the NRF.

“Last year’s strong results were thanks to growing wages, stronger employment and higher confidence, complemented by anticipation of tax cuts that led consumers to spend more than expected,” Kleinhenz said. “With this year’s forecast, we continue to see strong momentum from consumers as they do the heavy lifting in supporting our economy. The combination of increased job creation, improved wages, tamed inflation and an increase in net worth all provide the capacity and the confidence to spend.”

At the October 3 press conference Kleinhenz also pointed out that the impact of Hurricane Florence on replacement and discretionary spending has yet to be measured.

Even with the increasingly tight labor market, NRF observed that retailers have been preparing for their busiest season of the year by hiring extra staff to help meet the demand expected during November and December.

As part of its forecast, NRF expects retailers to hire between 585,000 and 650,000 temporary workers this holiday season, up from last year’s 582,500.

NRF earlier reported that retail sales and industry job growth remained strong in August, as it has all throughout this year. In August it also raised its sales forecast for all of 2018 at a minimum of 4.5% over 2017 rather than the 3.8% to 4.4% range forecast earlier this year.

Stores, websites and delivery companies have advertised more than 330,000 seasonal job openings so far, the employment firm Challenger, Gray & Christmas reports. That number is expected to double in the coming weeks.

Amazon recently announced that as of November 1 it will raise the minimum wage for all of its employees in the United States to $15 an hour. The new wages will apply to more than 250,000 Amazon employees, including those at Whole Foods, and more than 100,000 seasonal employees it plans to hire for the holiday season. However, the change will not apply to contract workers.

FedEx announced that it plans to hire 550,000 seasonal employees, while UPS says it will add about 100,000, and expects 35,000 will remain with the company as permanent employees after the season ends.

Latest from Global Supply Chain

25560070 © Yuliia Brykova |
Supply Chain Stability Improving
#64128824@Igor Groshev|Dreamstime
Preparing for Longer Conflict in the Red Sea: