The holiday shopping season is nearly upon us, and the forecast is merry and bright, at least as far as retailers are concerned.
The holiday edition of Bain and Company’s Insights newsletter forecasts a growth in sales of nearly four percent, which is significantly higher than the 10-year holiday season sales average of 2.6 percent.
What’s leading to this increase? Bain points to a few different factors:
- High levels of consumer confidence
Consumer confidence is at a level it hasn’t reached in 13 years, despite things like the hurricanes in Texas and Florida. The Michigan Index of Consumer Sentiment was 101.1 in October, up from 87.2 at the same time last year.
“With employment and incomes increasing, consumers are more confident this year, and that is reflected in their buying plans for the holidays,” National Retail Federations President and CEO Matthew Shay said in a news release.
“Retailers have been stocking up in expectation of this, and all signs are that this will be a busy holiday season. Retailers are preparing for a rush of consumers leading into Thanksgiving and all through December, and are offering a wide array of merchandise and promotions so shoppers can find great gifts and great deals at the same time.”
The NRF’s own 2017 holiday forecast predicts spending will be up between 3.6 and four percent this year for a total of $678.8 billion to $682 billion.
- Rising stock prices, greater wealth
“We expect holiday spending from all household segments (affluent, aspirational and lower half) to show strong growth this season,” Bain’s analysts wrote.
They note that stock markets have performed well this year, with the S&P 500 Index up for than 12 percent to reach an all-time high. The Case-Shiller Home Price Index is growing, and unemployment is at its lowest level since 2001. All these trends point to U.S. shoppers with more money to spend.
- More housing-related expenditures
Sales of in-store home furnishing products grew 7.5 percent between the first half of 2016 and the first half of this year, primarily due to a strong housing market. This growth will be buoyed even further by rebuilding efforts from this year’s hurricanes and wildfires.
In general, Americans are spending more on their homes. Major home improvement chains continue to see healthy growth with appliance sales leading the way.
- An extra day
Thanksgiving comes 32 days before Christmas this year – as opposed to 31 days in 2016 – giving shoppers an extra day to shop. Also, Christmas arrives on a Monday this year, offering consumers a full weekend to make last-minute purchases before the holiday. Having extra days to connect with customers whether in-store or online will boost overall holiday sales. In a Deloitte Insights survey, 79 percent of the survey takers expect to spend as much or more than 2016 which could push the 2017 holiday season spending past one trillion dollars.
Understanding demographic trends and how they impact holiday spending
Meanwhile, the professional services firm PricewaterhouseCoopers predicts that 88 percent of consumers will shop in stores this year, while 84 percent will shop online.
“Retailers understand the imperative to create a community of commerce — a welcoming environment where shoppers enjoy spending their time as much as they enjoy spending their money,” PWC wrote in their 2017 holiday forecast. “In today’s environment, they are constantly recalibrating the finely tuned—and very individualized—balance of convenience, price, speed, and variety to determine which channel works best in a purchasing decision.”
PWC also notes that millennial shoppers – who came of age in an era where online peer reviews were always available – have “little use for traditional advertising” to find out about products. Instead, they are looking for real insights, and “have no patience for stories that don’t speak directly to them.”
Here at ProCorr Display, we have been helping our clients leverage their brand identify by focusing on building an in-store presence. We create eye-catching point-of-purchase displays that tell your company’s story. And because we know how busy stores can get during the holidays, we design with durability in mind.