Shoppers Spending More May Make A Merry Christmas For Retailers


NEW YORK (AP) — Shoppers who are feeling good about the economy and spending more than expected on items like kitchen gadgets, toys and coats could make this the best holiday season in several years.

That’s good news for retailers, some of which have had few reasons of late to be merry. But there’s no question that stores need to keep adapting to how people shop as spending moves online. Customer sentiment could shift again based on how they feel the tax overhaul is affecting them. Tax cuts mean some shoppers may have more money in their pockets, but they could opt to save it instead of spend it.

Experts have issued rosy forecasts for the season. Shoppers seem to be in the mood as unemployment is at 17-year low and consumer sentiment has reached its highest level since 2000.



“I feel confident and optimistic about spending this year,” said Jorge Nova of Miami as the shopping began on Thanksgiving weekend, when he lined up at Best Buy and bought a 65-inch TV. “I don’t really have a clear budget. It’s been a good year for me.”

Shoppers are spending at a pace not seen since the Great Recession, says Craig Johnson, president of retail consulting group Customer Growth Partners. Jack Kleinhenz, chief economist at the National Retail Federation, predicts retail sales will meet or exceed the trade group’s holiday forecast. That could mark the best performance since 2014. And Tom McGee, CEO of the International Council of Shopping Centers, believes mall traffic and sales were higher than last year as shoppers bought electronics, clothing and toys.

The week leading up to Christmas is critical for stores, accounting for more than 20 percent of traffic for the overall season, says ShopperTrak, which monitors foot traffic. Because of the calendar this year, with a full weekend leading into Christmas, retailers also may see more late shoppers.



But plenty of stores are struggling. Fifty retailers have filed for bankruptcy this year, according to S&P Global Market Intelligence. Many of them very small companies but some are well-known brands like Payless ShoeSource and Toys R Us. There have been nearly 7,000 announced store closures this year, according to Fung Global Retail & Technology, which exceeds the 2008 peak of 6,200.

But most department stores, which have been struggling over the past three years, seem to have held their own. Macy’s Inc. announced in early December it was adding an extra 7,000 holiday temporary workers because of strong traffic. And some specialty clothing chains like Urban Outfitters and American Eagle Outfitters have said that holiday sales have been strong.

While a good season gives stores a boost in confidence and shows their investments are working, they need to keep up with shoppers. Ken Perkins, president of research firm Retail Metrics LLC, is skeptical about whether the momentum will continue through 2018 and wonders if retailers will be able to drive enough foot traffic to make each store profitable.

Plus, McGee and other analysts say it’s still unclear how exactly the tax changes will affect consumer spending. But McGee does expect shoppers will feel comfortable about spending with more money available.

Be the first to comment

Leave a Reply

Your email address will not be published.


*


This site uses Akismet to reduce spam. Learn how your comment data is processed.