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Jobs and consumer confidence are both up, which means this holiday shopping season is expected to be strong. Some people have already started shopping, and a 4.5 percent year-over-year increase in sales isn’t out of the question.
If the experts are correct, U.S. retailers can look forward to the holiday shopping season this year.
Two of the largest retail trade organizations in the country – the International Council of Shopping Centers and the National Retail Federation – are both predicting solid year-over-year gains this Christmas: the council is predicting a four percent increase, while retail federation is forecasting essentially the same thing, a 4.1 percent hike.
Deloitte, the New York-based accounting and retail consulting firm, is slightly more optimistic. It’s predicting a four to 4.5 percent increase this year compared with the 2013 holiday season, or somewhere between $981 billion and $986 billion in total sales from November through January.
Last year, holiday spending was up 2.8 percent nationwide compared with 2012, according to Deloitte.
Considering that most retailers are pleased with a three percent year-over-year increase in holiday sales, and many have struggled to meet that goal during the past few years, a four percent increase could be considered a watershed.
Shoppers are also expected to hit the malls earlier this year: about 35 percent of all consumers will have started their Christmas shopping by the end of October, three out of five will have started before Thanksgiving and 86 percent will have started by the end of Thanksgiving weekend, according to the council.
Two-thirds of all consumers said they expect to have their shopping finished by Dec. 15, and only one percent of those surveyed by the council said they don’t plan to start their holiday shopping until Dec. 24, said the council, which surveys shoppers every fall about their spending plans for the upcoming Christmas season.
An early start means consumers have more money to spend this year and they’re willing to spend it, said Jesse Tron, spokesman for the New York-based council of shopping centers.
“This is certainly the best year we’ve seen since the recession started,” Tron said. “We’re looking at a four percent increase, which would be a healthy boost if it happens. Just about every retailer would be pleased with that.”
Like most years, electronics and clothing are expected to be the biggest sellers. Thanks to the popularity of Apple’s iphone 6, which went on sale in September, electronic sales are expected to rise substantially this year: 52 percent of consumers said the expect to buy at least one electronic gift this year, up from 27 percent last year, the council stated.
“It’s a trickle-down effect,” Tron said. “People buy the new iphone, but that also puts them in a mindset to buy other electronic items.”
U.S. consumers plan to spend an average of $677 on Christmas-related items this year. About $560 of that will go towards gifts, while $118 will go towards other holiday items, such as decorations and wrapping paper, according to the council.
Roughly 70 percent of those surveyed said they expect to spend as much or more on Christmas gifts than they did one year ago.
Why is the outlook so much more positive in 2014? A number of factors, including higher employment, lower gas prices, a stronger housing market and a relatively strong retail year to date, said Jackie Fernandez, a partner and retail specialist in Deloitte’s Los Angeles office.
All of that adds up to greater consumer confidence, which might be the most important issue heading into the holiday shopping season, a five-week stretch that determines whether a lot of retailers will have a profitable year.
“Going into November, all of the indicators line up in our favor,” Fernandez said. “That hasn’t happened in a long time, certainly not since before the recession started. I’ve talked to a lot of retailers and clients, and they’re pretty upbeat. Just the fact that gas prices are down helps tremendously, because we don’t have the mass transit that they have in other parts of the country.”
Foot traffic has been up this month at Inland Center Mall in San Bernardino, which means people are either already shopping for the holidays or they’re getting ready to, said Terri Relf, the mall’s senior marketing manager.
“I talked to someone the other day and they said they were already done,” Relf said. “I don’t know if they were serious, but I do know that we’ve been busy, and that’s a good sign in mid-October.”
Macy’s, one of Inland Center’s anchor tenants, will open at 6 p.m. Thanksgiving. The rest of the mall is scheduled to open at midnight. Expect to see deep discounts starting on Black Friday and lasting through the weekend, and a lot of people buying gift cards, which seem to get more popular every year.
Online shopping, which has also grown in popularity during the past few years, might cool off this year, Relf said.
“I think there are still a lot of people who like to get out and shop, and they like to see things before they buy them,” Relf said. “Also, when you buy something online, shipping is an issue.”
Inland shoppers may buy more gift cards in 2014, but nationally the number is expected to drop: only 45 percent of those surveyed by the council said they expect to purchase a gift card this year, down from 60 percent last year.
About 50 retailers at Galleria at Tyler in Riverside opened at midnight last year on Black Friday, and more are expected to do that this year even though the mall won’t officially open until 6 a.m., said Jim Fuson, the Galleria’s senior general manager.
“We can certainly agree with sales being up four percent,” Fuson said. “Our sales have been good recently and our foot traffic is up, so there’s no reason to think sales won’t be up compared to last year.”
