Report Gives Troubled Retail Sector an Early Holiday Present

NEW YORK CITY—While the retail sector continues its sometimes-painful ongoing evolution, a report released on Wednesday is spreading some early holiday cheer to retailers and commercial real estate professionals alike.

Deloitte LLP predicts overall 2018 holiday sales will climb anywhere from 5% to 5.6%, while e-commerce sales will soar between 17% to 22%, an increase from the 16.6% hike in e-commerce sales posted during the 2017 holiday season.

In its annual holiday forecast report, Deloitte’s retail and distribution practice expects total holiday sales (seasonally adjusted and excluding motor vehicles and gasoline) to exceed $1.10 trillion between November 2018 and January 2019. Retail sales between November 2017 and January 2018 grew 5% and totaled $1.05 trillion according to the US Commerce Department.

Additionally, the global audit, consulting, tax and advisory services firm forecasts e-commerce sales to reach between $128 billion to $134 billion during the 2018 holiday season. During last year’s holidays, e-commerce sales totaled $109.8 billion.

Daniel Bachman, Deloitte’s US economic forecaster, says, “The anticipated growth in holiday sales is likely because of solid disposable personal income growth, which we expect will be in the 5% to 5.4% range. That is above last year’s 4.7%.”

Other factors that will contribute to additional retail spending during the holidays include a strong labor market, elevated consumer confidence and a stable personal savings rate of around 7%, he adds.

There are some headwinds that could dampen holiday sales, including the impact of Fed tightening, a potential for the stock market to be overvalued as believed by some speculators and a decline in market conditions that would adversely affect consumer confidence and household wealth.

“Consumer sentiment and spending indicators provide a healthy outlook for retailers across channels with strong expectations for store-based and online retailers,” says Rod Sides, vice chairman, Deloitte LLP and US retail and distribution sector leader.

He adds retailers continue to advance their shipping, delivery, in-store experiences and tech-enabled commerce functions to help foster stronger sales.

Some of these advancements have included “showrooms, interactive displays that replace sorting through racks with simple, easy selections or web-based visualization that lets people get a feel for style, fit and appearance from apparel to home decor,” he says.

He adds that voice-enabled shopping and shortened delivery times may also accelerate competition around fast and easy purchasing options.

Sides notes, “The leading retailers this holiday season could be the ones who are able to strike the right balance between innovation, experience, and value that best engages the consumer and stands out in a busy season.”