NRF/CTA: Broader Holiday Season Expands Sales Opportunities

In a joint National Retail Federation and Consumer Technology Association holiday conference call, NRF chief economist Jack Kleinhenz and CTA chief economist Shawn DuBravac said that the holiday season is expanding and the latter part of the season will be especially important this year. Both economists told HomeWorld Business that a longer holiday season, if even by a day, and the fact that Christmas falls on a Friday this year, have the potential to build late season sales.

Beyond that, the gift card season continues to gain strength and, essentially, extends holiday-related purchasing into February, and perhaps a bit beyond.

DuBravac noted that CTA data demonstrates that many gift card purchases occur 60 to 90 days after their purchase, which means they need to be kept in retail consideration at least until early March, well into the spring purchasing season. Kleinhenz pointed out that the Friday fall of Christmas means that the entire week is likely to experience strong sales and that consumers will have a full weekend for purchasing. December 26 and 27 may see a healthy dose of late gift buying, including for holiday weekend get togethers, and self-spending from consumers flush with holiday cash and gift cards.

DuBravac cited a phenomenon that may impact spending in the week before Christmas. More often, retailers are running special promotions in the hours after stores close, which provides even more opportunity to prompt purchasing, perhaps even a little over-budget spending as the holiday spirit encourages impulse buying.

Last minute shoppers should see some additional inventory-related promotions in the holiday as retailers face challenges left over from some slow summer spending and the port strike.

Other key points from the NRF/CTA conference call:

  • About half of consumers have shopping to do and half are done or almost done.
  • Consumers, because of income, job and consumer credit growth, have the capacity to spend but actual purchasing has been a bit sluggish, which may be the result of relatively slow, even “tepid” income gains and uneven progress across economic sectors.
  • The holiday season has become broader, beginning earlier as well as ending later, with more preliminary discounts and events such as Cyber Monday extended.
  • Online sales will grow by 14%, mobile commerce by 35%.
  • December is going to be a more important period as consumers are less concerned about nailing down particular purchases.
  • Warm weather has had an impact, hurting cold weather-related goods, and that will affect late season promotions.
  • Willingness to purchase technology is relatively strong.
  • Tech purchasing in December has become more sharply focused on goods that sold well in the Black Friday/Thanksgiving period.

As fuel and some retail categories have experienced deflation, at least some dollars have shifted to services purchasing.

For 2016, the economists said, GDP growth, should trend a bit higher, perhaps as high as 2.7%. However, politics, in an election year, could have a substantive impact on consumer spending as may geo-political events and the slowing global economy. One result of a slower international economy may be continued pressure on commodity prices, which could spawn some deflationary trends.

Another concern is capital spending. Business investment has been relatively light lately, but that may be the result of more efficient use of capital. Factors such as Uber and Airbnb are among those that can generate more efficient business spending. A positive aspect of that trend is the creation of new sectors of the economy. Another factor to consider is automation as it becomes more ingrained in everyday life. Right now, the phenomenon is particularly evident in automobile driving assists, which manufacturers are promoting prominently.

—MIKE DUFF