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NRF Projects Higher Consumer Spending For The Holidays

Retail should expect a 'solid' 3.6 percent to $655.8 billion — significantly higher than the 10-year average, says the NRF.

Several years of anemic holiday season sales may have reached the end, the National Retail Federation is forecasting.

The trade group expects sales in November and December — not counting autos, gas, and restaurant consumer spending — to rise by a “solid” 3.6 percent to $655.8 billion.

That’s a good deal stronger than the 10-year average of 2.5 percent and above the seven-year average of 3.4 percent since recovery began in 2009. Additionally, NRF is forecasting non-store sales to increase between 7 and 10 percent to as much as $117 billion.

“All of the fundamentals are in a good place, giving strength to consumers and leading us to believe that this will be a very positive holiday season,” NRF President and CEO Matthew Shay said in a statement. “This year hasn’t been perfect, starting with a long summer and unseasonably warm fall, but our forecast reflects the very realistic steady momentum of the economy and industry expectations.”

Too Rosy?

Holiday sales in 2015 were up 3 percent over 2014, which mirrored the wider economy’s slow crawl out of the weak recovery following the 2008 recession.

“Consumers have seen steady job and income gains throughout the year, resulting in continued confidence and the greater use of credit, which bodes well for more spending throughout the holiday season,” NRF Chief Economist Jack Kleinhenz added. “Increased geopolitical uncertainty, the presidential election outcome and unseasonably warm weather are the main issues at play with the greatest potential to shake consumer confidence and impact shopping patterns.”

Still, retail veteran Ryan Craver, CEO of kid’s apparel brand Trimfit, finds the NRF’s view “a bit too rosy.”

“Retailers are working off a glut of inventory from last Fall, imports are down within apparel, marginal hardware upgrades from the likes of Apple and Samsung are the factors we are up against,” Craver told GeoMarketing. “I don’t foresee a holiday season any stronger than the historical 1.5-to-2.5 percent range.

“On the positive, all of these factors equate to aggressive discounting and markdowns for consumers. We will likely see continued strength in the online retailers, health and beauty, home improvement and off-price,” Craver said.

Omnichannel Influence

At the same time, retailers themselves have sharpened their online-to-offline marketing tools over the past two years.

From loyalty programs to personalized digital features in-store to overhauling beacon strategies, there’s a sense that retailers have been quickly catching up to the way customers see brands — that is, they don’t make the distinction between e-commerce and in-store transactions; it’s all just shopping.

For example, this past spring, a NinthDecimal/ZenithOptimedia study of cross-channel marketing found that the use of omnichannel-focused ads lifted store visits an average of 24 percent.

“The whole market is shifting much more towards a view of looking at media channels separately — now, it’s about that individual profile and recognizing that it’s about connecting single individuals to those multiple devices,” said NinthDecimal President David Staas at the time.

While it’s hard to pinpoint the impact of cross-platform marketing will have on holiday sales, but considering Proxbook’s recent industry forecast is 400 million beacons by 2020 with 6 million deployments as of Q2 — and the fact that retail remains the largest category using indoor marketing sensors — there is an appreciable affect.

About The Author
David Kaplan David Kaplan @davidakaplan

A New York City-based journalist for over 20 years, David Kaplan is managing editor of GeoMarketing.com. A former editor and reporter at AdExchanger, paidContent, Adweek and MediaPost.