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Banner Year Expected For Holiday Retail Sales

This week’s news of former retail giants Sears and Kmart filing for bankruptcy is bound to spur headlines about the death of retail in the U.S.  However, multiple forecasts predict that robust 2018 holiday shopping will result in an increase in both in-store and online holiday sales as compared to recent years.

According to Deloitte’s 2018 forecast, an increase of 5% to 5.6% in holiday retail sales over last year is projected. These findings are supported by the National Retail Federation’s estimate of a 4.3% to 4.8% increase in holiday retail sales from last year. These positive projections continue a trend of strong holiday retail sales in the 2017 holiday season, which posted a 5.3% increase in sales over the 2016 holiday season.

These positive retail sales trends are not limited to just the holiday season. In fact, the NRF predicts that overall retail sales for the 2018 calendar year will increase by 4.5% over last year’s sales. Another estimate expects 5.1% growth in retail sales over 2017. While the sales growth is most dramatic in online retail, with an approximately 15% growth rate over last year predicted, all types of retail sales are expected to see gains. For example, brick-and-mortar retail sales are expected to grow 3.6% over last year.

Holiday sales play a vital role in overall retail health, particularly with respect to retail sales in brick-and-mortar locations. In fact, according to one estimate, brick-and-mortar sales comprise more than 80% of overall holiday retail sales. While the percentage of consumers preferring online shopping has increased, over 35% of those polled by Deloitte in 2017 still preferred holiday shopping in a brick-and-mortar location, and nearly one-third of those polled found it important that a retailer have both an online presence and brick-and-mortar locations. Holiday sales also constitute a significant proportion of yearly retail sales, with Deloitte calculating that 2016-2017 holiday retail sales constituted 25% of yearly retail sales. A strong holiday sales performance can make or break a retailer’s year.

As we have previously written, many customers continue to visit brick-and-mortar locations because they prefer to interact with and experience the products firsthand. Customers desire an immersive shopping experience, which brick-and-mortar locations are better positioned to offer than online retailers. The holiday season offers retailers a prime opportunity to take advantage of this customer preference. Despite the advent of “Cyber-Monday,” many shoppers continue to line up outside stores, eager to take advantage of Black Friday specials. Additionally, holiday decorations and themed promotions can create a holiday atmosphere to entice consumers to purchase. Even traditional Santa Claus displays are being revamped to draw more customers, with one owner of malls throughout the Mid-Atlantic offering a “Fast-Pass” to allow customers to save time waiting in line to have a photo taken with Santa. These in-store offerings provide holiday shoppers experiences not available through online shopping.

As the holiday season approaches, sales forecasts indicate that retailers will have much to celebrate this season. In addition to increased online sales, holiday promotions and in-store experiences will offer brick-and-mortar retailers an opportunity to draw in customers and realize the forecasted sales growth.

Related topics: Holiday, Retail, Retail Sales