Deloitte, AlixPartners: Holiday Sales Could Increase 4.4% or More

gift box

As retailers start wrapping up their holiday 2017 plans, the first predictions about the make-or-break season are coming out—and so far, they look like a gift.

Though the narrative surrounding retail has been rather glum this year, analysts anticipate robust holiday sales.

AlixPartners says to expect a 3.5% to 4.4% boost in sales from November through January, compared to the same period last year.

And though that’s good news, the firm tempers the outlook by noting individual results may vary. “The so-called ‘Retail Apocalypse’ may not be nigh after all,” said Joel Bines, co-head of the company’s retail practice and managing director of the firm. “However, there definitely will be losers as well as winners this holiday season. And the overriding question is whether individual retailers can take advantage of the period ahead and redouble their efforts to deal, both strategically and tactically, with everything from the rise of online shopping to the fact that many younger consumers today prefer spending their money on experiences rather than on tangible products.”

AlixPartners’ outlook is based on sales performance for the year through back to school, which the company has found typically accounts for about 66 percent of annual retail sales, with the holidays making up roughly 17 percent of the total.

Deloitte, which takes a different tack, has come up with a slightly rosier prediction. Deloitte forecasts a sales increase between 4 and 4.5% over last year, totaling $1.04 trillion to $1.05 trillion. E-commerce is expected to grow by 18 to 21 percent, surpassing the 14.3 percent growth from last year.

The company derived its numbers from the expected strong personal income growth, elevated consumer confidence, robust labor market, and low and stable personal savings rate.

“Sentiment and spending indicators are firing on all cylinders, but the question is: How will retailers respond given the profound disruption across the industry?” said Rod Sides, vice chairman, Deloitte LLP and U.S. retail and distribution sector leader. “Retailers should modify their assumptions about what drives traffic, engagement and holiday sales growth, and realign around customer experience, creating relevant, emotional and inspirational connections that go beyond just product, price and assortment.”

Sides advises retailers to embrace customization as a way to differentiate from competitors, of which there are many, including new, upstart disruptors.

While Deloitte is optimistic about the season, the firm also acknowledges a few variables that could slow sales, including consumers opting to save rather than spend, the debt ceiling crisis causing job loss and the lingering impact of this year’s destructive hurricanes.

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