It's Beginning to Look a Lot Like...Holiday Spending
While it's not yet Halloween, it’s starting to feel a lot like Christmas — at least, for retailers who are already gunning hard to win over consumers and take advantage of holiday spending.
That can only mean one thing, the holiday spending forecasts are beginning to trickle out, and it appears analysts are expecting holiday sales to be solid.
Deloitte's retail and distribution practice said Wednesday they expect total holiday sales to climb to between $920 billion and $925 billion, or an increase of 3.5 percent to 4 percent over last year.
They also expect to see some big changes in consumer behavior stemming from new technology this holiday season.
Deloitte's forecast calls for a 15- to 17-percent gain in holiday sales outside the store. About 75 percent of that will occur online, while 25 percent will come from shopping via catalogs and interactive television.
But perhaps most interesting: Deloitte expects smartphones to help, not hurt, in-store purchasing. Shoppers using their smartphones inside a store are 14 percent more likely to make in-store purchases than those not using smartphones during their trip, according to Deloitte.
This suggests that the "showroom" effect — where shoppers browse merchandise in a store and then compare prices online and potentially purchase it elsewhere — may not be as big of a problem as some may fear.
Others wonder if higher consumer confidence will translate into better holiday sales. On Tuesday, the Conference Board's latest reading on consumer confidence hit its highest level in seven months, despite the uncertainty surrounding the election and broad economic sluggishness.
"It's not clear that higher consumer confidence will necessarily ring cash register bells," said Jack Ablin, chief investment officer for Harris Bank. He said that while retail sales growth and consumer confidence did move together for more than a decade, in 2009 the correlation broke with retail activity surging while confidence only marginally improved. Plus, retail spending is skewed toward the highest earners, so "maybe we were measuring apples and oranges."
Either way, retailers appear to be building inventory levels to stock shelves with holiday merchandise. Retailers import the majority of the goods they need to fill the racks for the holiday season from August through September, and the National Retail Federation's Global Port Tracker report reveals imports for those three months were up 8.9 percent over last year.
While it remains to be seen if those goods will be purchased, it has proven to correlate with retailers' expectations. Too much inventory is a danger for retailers, and many have learned the hard way in recent years not to overstock. It’s been a key initiative to place conservative merchandise orders to avoid unsold merchandise lingering on store shelves. But the NRF's Global Port Tracker report seems to show retailers are confident they can sell more merchandise this holiday season.
Let the countdown begin. It's just 89 days until Santa's big day.
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-By Courtney Reagan, CNBC Reporter