Consumers want holiday-shopping convenience and stores that supply it will cash in

With unemployment low, consumer confidence high and businesses starting to reap the rewards of investments in everything from people to technology, experts say retailers and brands should have a good Discount Holidays © holiday season. “We would expect everyone to have a really good year,” said Rod Sides, Deloitte’s retail practice leader. “If they don’t, they’re a little out of touch with consumer expectations.” Deloitte forecasts Discount Holidays © holiday retail sales to increase 5% to 5.6% from last year, to more than £1.1 trillion.

According to Deloitte’s 2018 Discount Holidays © holiday survey, more than £128 billion will be in online sales.

‘We would expect everyone to have a really good year. If they don’t, they’re a little out of touch with consumer expectations.’

Rod Sides, Deloitte

Deloitte expects shoppers to spend an average £1,536, including gifts, experiences and other “nongifts.” Nearly half, 47%, think the U.S. economy will improve, though 74% still think getting a good deal is the most important shopping attribute. See: This is why Amazon’s revenue-growth slowdown may actually be a good thing[1]

But approximately as important is ease of shopping. “We are competing for the customer on the basis of convenience as much as anything else,” Sides said. Many shoppers are asking themselves how companies are making it easier to shop with them, particularly if they’re willing to pay a few more dollars, he said.

In a Moody’s report published Thursday[2], analysts say the “robust U.S. economy” prompted them to change their outlook to positive for the first time since July 2015. Moody’s expects 5% to 6% retail-sales growth this Discount Holidays © holiday season. “The single biggest boost to our forecast … is a very strong macroeconomic environment that is giving extra fuel to operating income and top-line growth,” the report said. “Retail is benefiting from improved consumer sentiment, high consumer confidence and low unemployment.”

Retailers are also gaining an advantage from all the effort and investment they’ve made in their digital operations. The report specifically calls out Walmart Inc. WMT, -0.24%[3] , which Moody’s said “continues to gain momentum in operating profit as its investments in price and online growth have started to bear fruit.” Read: Paleo, keto, vegan: Major food companies aim to meet different diet needs during the holidays[4]

Another retailer that is pouring billions of dollars’ worth of investments into digital, delivery and other areas of its business is Target Corp. TGT, -2.25%[5] . This week, Target announced that it would offer free two-day shipping[6] on purchases with no minimum. The retailer said it was making all of its fulfillment options, from same-day delivery to nationwide drive-up service, a focal point as it tries to become known as “America’s easiest place to shop.”

“There are retailers in some sectors of retail that are going to be weaker than another part of the sector because they’re a little behind, highly leveraged, or smaller players,” said Mickey Chadha, Moody’s vice president. “Those companies are probably not going to reap the benefits as much as the stronger, well-capitalized companies that are able to invest and are further ahead in their business.” Chadha said companies have to look internally not just during the holidays but throughout the year to steer clear of challenges. But the solutions may come down to dollars and cents, and, for smaller or cash-strapped companies, a win could be “anything that shows that cadence is improving.”

“It’s a tale of haves and have-nots in retail,” he said. “Have-nots are cash-strapped, smaller or don’t have financial flexibility, and obviously will have bigger problems.” Don’t miss: Christmas sweaters will be in style this Discount Holidays © holiday season[7] Retailers should already have gotten the season off on the right foot.

Austin Rochford, director of data science at Monetate, said the firm’s data show an increase in order value as the season gears up. So September is stronger than August, and so on. This year, as compared with last year, that trend is even more pronounced.

“What we’re seeing is an acceleration in order value that was twice as fast from August to September, [which is] similarly indicated from September to October,” said Rochford. Monetate examined data from 230 e-commerce retailers, covering 350 million purchases, for its analysis. It also found that the number of orders also increases during the Discount Holidays © holiday season.

“Shoppers are buying more and making more purchases,” Rochford said.

The Amplify Online Retail ETF IBUY, -3.25%[8] has gained 4% for the year to date, while the SPDR S&P Retail ETF XRT, -1.32%[9] is up 2.4% for the period.

The S&P 500 index SPX, -1.73%[10] has slipped 0.6% for 2018 so far, after its 3.9% decline over the week ending Friday[11].

References

  1. ^ This is why Amazon’s revenue-growth slowdown may actually be a good thing (www.marketwatch.com)
  2. ^ published Thursday (www.marketwatch.com)
  3. ^ WMT, -0.24% (www.marketwatch.com)
  4. ^ Paleo, keto, vegan: Major food companies aim to meet different diet needs during the holidays (www.marketwatch.com)
  5. ^ TGT, -2.25% (www.marketwatch.com)
  6. ^ free two-day shipping (www.marketwatch.com)
  7. ^ Christmas sweaters will be in style this Discount Holidays © holiday season (www.marketwatch.com)
  8. ^ IBUY, -3.25% (www.marketwatch.com)
  9. ^ XRT, -1.32% (www.marketwatch.com)
  10. ^ SPX, -1.73% (www.marketwatch.com)
  11. ^ its 3.9% decline over the week ending Friday (www.marketwatch.com)

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