Americans are expected to open their wallets wide this holiday season, and retailers should see a nice sales bump.
Consumers expect to spend an average of $1,007.24 in the November-December period this year, up 4.1% from $967.13 last year, according a recent survey by the National Retail Federation and Prosper Insights & Analytics.
That rise would beat expectations of a 3.4% bump in holiday spending compared to last year, according to Katherine Cullen, the NRF's director of industry and consumer insights. It's been a strong year for retail sales overall, she said. The NRF recently forecast a "minimum 4.5% increase" this year compared to 2017, up from a previous forecasted increase of 3.8% to 4.4%. The figures exclude automobiles, gasoline stations, and restaurants.
"Consumers are confident and they don't mind spending more," Cullen said. That's thanks to a strong U.S. economy and the lowest unemployment in a generation, about 3.7% in September.
The NRF represents retailers from the United States and more than 45 countries.
"It should be a very good season," said Dana Telsey, the CEO of Telsey Advisory Group. Consumers have the ability to spend thanks to wage increases and more options from product innovations. And this year, the Thanksgiving holiday is coming relatively early in the month, another plus, Telsey said. She sees a 4% to 4.5% retail holiday sales increase coming.
In particular, apparel, cosmetics, and off-price retailers should be popular with shoppers, Telsey said. Among companies she thinks could do well are American Eagle Outfitters (AEO); Nordstrom (JWN), and Lululemon (LULU). Lululemon, Telsey said, "keeps getting it right," and is now expanding beyond women's athletic apparel to men.
Cullen said holiday shoppers are planning to spread their shopping across multiple channels and types of stores: An equal number (55%) will shop online and in department stores, while 51% will go to discount stores, according to the survey.
It appears some of the Amazon -induced (AMZN) gloom that descended on brick-and-mortar retail stocks in late 2016 has abated. At one point in early 2017, the retail sector was down about 40%. Many have bounced back nicely from lows, even after the broader stock market's selloff in October. Macy's (M), for example, has approached its pre-2017 high, while Target (TGT), which gets kudos from investors for its online approach, is near all time highs. Retail stocks are up 18% this year, and Amazon is still up 30%, even as it lost more than 20% in recent weeks as it got hammered with other big tech stocks.
Tariffs on a wide range of consumer goods from China took effect last month, but any impact on pricing during the holiday season is expected to be minimal, according to the NRF.
The survey of about 7,300 adults, conduct Oct. 1-11, follows the NRF's annual holiday spending forecast on overall spending. A few weeks ago, the NRF estimated that holiday retail sales in November and December will be up between 4.3% and 4.8% over 2017 levels, for a total between $717.45 billion and $720.89 billion.
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