Forecasters think this year will be better than 2015. Deloitte, a consulting firm, predicts sales will grow this holiday season between 3.6 and 4 percent. Another consultancy, AlixPartners, estimates the industry’sales will tick up between 3.3 and 4 percent.
That kind of performance would stack up favorably to last year, when the National Retail Federation reported that the industry notched 3 percent growth. That figure wasn’t terrible, but it was sharply below the 3.7 percent the group had forecast at the time. The industry chalked up its troubles in the 2015 season to a variety of factors: Promotional activity was high, and weather was unusually warm in broad swaths of the country, potentially making it less enticing to buy items such as boots and gloves.
This year, analysts are noting that the economy has broadly continued to improve, and that should encourage people to shop.
There are tea leaves to read in retailers’ plans for their seasonal workforces. Several big chains already have announced how many temporary workers they’ll add to get through the holiday crush. Macy’s plans to hire 83,000 employees, while Target is moving to add 70,000 store workers and an additional 7,500 people in its e-commerce warehouses. Kohl’s, meanwhile, plans to bring on 69,000 seasonal staffers. What’s most noteworthy about these numbers is that they are barely changed from last year. This suggests that these big-name stores aren’t expecting any particularly dramatic swings in sales or traffic.
What’s perhaps more interesting than the headline hiring numbers is the fact that Macy’s and Target are bumping up their holiday-season hiring for their e-commerce warehouses. For example, Macy’s had about 12,000 temporary workers in distribution centers last year. This year, the company is boosting that to 15,000. That’s a clue that they expect online, not stores, to be the key driver of sales growth. By aiming to put more manpower in the warehouses, these retailers could be in for a talent challenge: Distribution center jobs can be harder to fill than store jobs because they are typically in more remote areas.
Keep an eye on mid-size retailers. Forecasters from Deloitte say these players may present strong competition to big-boxes this year. While Deloitte did not call out specific retailers it expects to do well, mid-size companies include the likes of men’s apparel chain Bonobos or skincare brand Aesop.
“This group has been collectively taking share from large, traditional retailers to the tune of $200 billion in annual sales over the last five years,” said Rod Sides, Deloitte’s retail sector leader, in a press release. “The retailers that compete on differentiated products and experiences should be well positioned to outperform other competitors during the holiday season.”
The presidential election could play a role — albeit a small one. Analysts are not suggesting the Clinton-Trump showdown will meaningfully impact sales results. But they do suggest the election could shake up the rhythm of when people hit the mall. RetailNext said it expects to see “variability” in early November because of the contest, and Deloitte predicts the event will serve as a “temporary distraction.”
Meanwhile, AlixPartners said that when a presidential election has appeared to impact sales in the past, the drag has typically come in September and October, with a bounce-back effect occurring in November and December.
Store traffic is likely to decline — but that might not be all bad. RetailNext, an in-store analytics company, says it expects brick-and-mortar store traffic to be down 11 percent in November and 5 percent in December compared to the same months last year. That may seem like a no-brainer, since people are continuing their steady march toward buying more gifts online.
And yet there’s more to it. RetailNext also projects that conversion — a measure of when a shopper goes from browsing to buying — will be up 0.5 percent this year, and will contribute to a 6.5 percent increase is sales per shopper. Here’s what that means: When consumers are going into malls, they won’t simply be wandering around looking for whatever catches their eye. They’ll be going with specific targets in mind, and they will only be going to stores where they know they can get them. So while retailers may end up seeing fewer visits to their stores, the visits they do get could be end up being more productive ones.
“The Force” is still very much going to be with us. What’s that? You’re not up for a rematch of last year’s Christmas morning lightsaber battle with your nephew? Tough luck. Retailers and toy reviewers are beginning to release their lists of “hot” toys for the season, and “Star Wars” is once again expected to be a dominant presence under the tree. Disney is scheduled to release a new film titled “Rogue One: A Star Wars Story,” in December, so a flood of new merchandise is slated to hit stores soon. Last year, huge holiday-season sales of “Star Wars” gear helped propel the toy industry to its best year in more than a decade. Impressively, sales growth this year is on track to outpace that. If it does, Star Wars and other popular properties such as Shopkins and Paw Patrol will have helped with that.