Deloitte Predicts Modest Retail Holiday Sales Growth

Retailers should see an uptick in holiday sales in stores and online this year, according to Deloitte’s annual retail holiday sales forecast.

Deloitte’s retail and distribution practice expects total holiday sales to exceed $1 trillion, representing a 3.6% to 4% increase in November through January holiday sales over last year’s shopping season. Additionally, Deloitte forecasts a 17% to 19% increase in e-commerce sales, reaching $96 to $98 billion during the 2016 holiday season.

“We anticipate a modest increase in sales growth as economic fundamentals that boost spending improve further,” said Daniel Bachman, Deloitte’s senior U.S. economist. “Consumers have ramped up their spending this year on the back of a strong labor market. We also expect slightly higher growth in disposable personal income during the upcoming holiday season compared with last year. Consumer confidence also remains elevated, despite some fluctuations in 2016. Additionally, households have been drawing down their savings, and therefore spending has been healthier than would normally be expected given the rate of income growth. While attention toward presidential elections may be a temporary distraction in the early part of the holiday shopping season, it should not have a negative impact on sales, and retailers may benefit from a pickup in post-election consumer spending.”

Deloitte also sees retail competition intensifying from both large and small retailers.

“We anticipate that marketplace fragmentation, more than e-commerce, will be the major disruptor this holiday season,” said Rod Sides, vice chairman, Deloitte and U.S. retail and distribution sector leader. “Retail competition will not only come from the big box down the street or major e-commerce players. It is also likely to come from the small and midsized retailers that focus on niche products and experiences. This group has been collectively taking share from large, traditional retailers to the tune of $200 billion in annual sales over the last five years. The retailers that compete on differentiated products and experiences should be well positioned to outperform other competitors during the holiday season.”

Digital interactions will influence 67%, or $661 billion, of retail store sales this holiday season, according to the research firm. This figure reflects the amount of traditional brick-and-mortar retail sales impacted by shoppers’ use of digital devices including desktop and laptop computers, tablets and smartphones.

“The trend to watch is the way that online, mobile and store channels influence each other,” added Sides. “Large e-commerce players and digital platforms such as Facebook and Pinterest are shaping what people think a great shopping experience is— a fast, highly-curated assortment with access to visuals, information and buying sources. Since these bigger platforms are more connected to the customer, retailers should consider including them as part of their digital marketing campaigns this holiday season.”