Date: Saturday, September 28th, 2019
Source: Logistics Management

Firm says this year's holiday season retail sales could be up 4%-to-4.5% ahead of 2018's 3.1% annual gain.

With all the uncertainty caused by the ongoing impact of the United-States “trade war,” it stands to reason that there has been somewhat of a trickle-down effect on consumer spending. And it is for good reason, too, considering that many of these tariffs, especially of late, have a direct consumer impact, which is, of course, a cornerstone of economic growth, with consumer spending directly impacting roughly 70% of U.S. GDP.

That serves as a decent backdrop to data recently published by business consultancy Deloitte, in the form of its holiday retail sales forecast.  The bottom line for the 2019 holiday sales forecast is that even despite the growing concerns about the economy (which are with merit, to be sure), Deloitte is bullish about this year’s prospects.

That bullishness is apparent in the firm’s numbers, including:

  • retailers can expect a sales increase between 4%-to-4.5% compared to 3.1% for the same period a year ago;
  • total sales are pegged to top $1.1 trillion between November and January, ahead of last year’s $1.09 trillion;
  • e-commerce is expected to grow 14%-to-18% annually to $144 billion-to-$149 billion in holiday season sales, ahead of $126.4 billion in 2018

Deloitte U.S. Economic Forecaster Daniel Bachman partially attributed the expected growth in the 2019 holiday season to a strong labor market.

“Near record-low unemployment rates, coupled with continued monthly job creation, may encourage people to spend more during the holiday season,” he explained. “The economy is still growing, albeit at a slower rate. Additionally, we continue to see consumer confidence elevated, which also helps boost holiday spending.”

The Deloitte executive also pointed out that this year’s holiday sales estimate shows what he called expectations for consistent growth over the course of the holiday season, adding that 2018 holiday season retail sales did not meet expectations. As for why that was the case, he cited the federal government shutdown, an increase in consumer spending, and a decline in the stock market as potential factors.

This Deloitte analysis was echoed, in part, by Neil Saunders, managing director of GlobalData Retail, in a research note.

Like Deloitte, Saunders said while there are concerns about the current state of the economy, they have yet to have a negative material impact on consumers.

“That position could yet change as we move into the final quarter, however, some softer prior year numbers should help offset any potential slowdown,” he wrote. “Several positive economic dynamics are supporting growth including modest wage gains, continued high employment and reasonably robust consumer confidence. A modest fall in gas prices added further momentum. The negative chatter around an economic slowdown and the impact of tariffs is clearly not yet hitting the ability or willingness of consumers to spend. That could change in the next few months if inflation starts to creep up and wage gains stall; however, the more modest prior year comparatives in November and December should offset any potential slowdown.”

Holiday retail sales projections aside, it was interesting, but not unexpected, to see at last week’s Council of Supply Chain Management Professionals (CSCMP) just how much of an influence retail sales, i.e. consumer spending, truly has on all things logistics, in terms or planning, processes, strategy, and operations among others.

Whether the topic was transportation capacity, last-mile logistics, or inventory optimization, as well as other examples, like, say next- or same-day shipping, there was no shortage of factors tying retail sales and consumer activity to today’s supply chains, not to mention future ones, too, at CSCMP.

Looking ahead, as Deloitte points out, 2019 holiday retail sales’ prospects look promising. Let’s hope that these numbers come to fruition and jump start a strong 2020, for both retail sales and the supply chain.

Click here to read the entire article from its original source