Elections, storms to impact retail spending

Inflation may have subsided, but retailers still approach the holiday season with considerable uncertainty.

Many factors that are difficult to predict This will impact consumer spending as they deck the halls and look for the perfect gifts. Unstable weather, election anxiety and a bargaining mentality could shape this season. And there are fewer days between Thanksgiving and Christmas than last year. Will put buyers on watch.

Yet there is reason for optimism for retailers: Shoppers are feeling more excited and planning to spend more than in previous holiday seasons, according to an annual survey from consulting firm Deloitte and a separate forecast from the National Retail Federation. Are.

According to the National Retail Federation, holiday spending in November and December is expected to increase 2.5% to 3.5% compared to 2023 and will range from $979.5 billion to $989 billion. This is a more modest increase compared to the 3.9% year-over-year increase for the 2022 to 2023 holiday season, when spending totaled $955.6 billion. The NRF figures do not include automobile dealers, gasoline stations, and restaurants.

Shoppers are expected to spend an average of $1,778 on the holidays this year, an 8% increase from last holiday season, according to a survey by consulting firm Deloitte. The survey, which included approximately 4,000 consumers and was conducted between late August and early September, attributed the increase in spending to a more favorable economic outlook, a perception among respondents that prices will be higher and higher among earners. There will be more willingness to spend among families. Annual income between $100,000 and $199,000.

Low unemployment, a return to more typical inflation levels and recent Federal Reserve interest rate cut Stephen Rogers, managing director of Deloitte’s Consumer Industry Center, said consumer sentiment is rising.

“Despite political talk, people are still in a good mental state,” he said. “When they look at their bank account and think about what their financial situation is, they feel better.”

Just weeks before Trick-or-Treat, shoppers got their first taste of holiday deals.

These early offers set the stage for a season when buyers are expected to look for more ways to stretch budgets after years of rising cost of living.

Nearly 80% of shoppers surveyed by Deloitte said they would attend deal events in October and November, up from 61% last year.

“Our deal to be strong has really been practiced over the last two years and we’re going to continue to do that,” Rogers said.

NRF CEO Matt Shay echoed that prediction. Speaking to reporters this week, he said the retail trade group expects a more promotional environment this holiday season, with deals on more brands and categories than a year ago.

Another potential challenge for retailers? Serving customers who focus more on decor and experiences than gifts. According to a Deloitte survey, consumers plan to spend 16% more year over year on experiences, but 3% less on gifts compared to last year’s holiday period. Non-gift purchases, including expenses Decoration and party apparel is also expected to grow by 9% year on year.

The firm’s survey found that spending in retail categories will remain relatively flat, averaging $1,043 in 2024 compared to $1,020 in 2023. Consumers across different income groups reported value-seeking habits, including less self-gifting, more frequent shopping at affordable retailers, and more. Looking for private label or “duplicates” of expensive items.

Rogers said this shift could hurt retailers selling merchandise unless they come up with attractive ways to tie their merchandise to experiences, such as suggesting hiking gear.

For home depotWhich sells a wide range of holiday decorations, including Santa-themed throw pillows and a giant animated reindeer for yards, the high demand for decorations could be an opportunity. Yet the home improvement retailer said it’s ready to find value for consumers, too.

This holiday season, Home Depot purchased lower-priced artificial Christmas trees, such as a prelit tree that sells for $49, said Lance Allen, senior merchandiser of holiday merchandise for the home improvement retailer.

As Americans await the results of the presidential election, will they also be shopping for the holidays?

This is a question on everyone’s mind including retailers and consumer brands wal-mart And sharkninjaThey’re hoping shoppers will browse and make a purchase rather than staying glued to the news. The election is on November 5, and if there is a race between vice presidents, it could take several days for the winner to be declared kamala harris and former president donald trump The survey ends as suggested.

SharkNinja CEO Mark Barrocas described the election as “the biggest unknown” that will shape the holiday season.

“It could be a shock and it could be nothing, and if the news cycle is omnipresent it could disrupt things for a few weeks,” he said. “Christmas is coming and the holiday season is here. It’s just a matter of how many distractions there are.”

He said the election and the news cycle surrounding it could also affect how consumers feel about the economy.

Walmart’s internal research suggests an “increase in positivity” of its shoppers. Enjoy fall and get ready for Halloween, said Jen Acera, vice president of customer insight and strategy at Walmart.

“One thing that’s still out there and ongoing is what’s going to happen with the election, and what happens with the election will really determine whether this is something that remains positive or not,” he said. ”

Already, some companies have blamed the election for their sales decline. Amazon well-groomed a weak forecast The comment was ridiculed by some as an excuse that demand for online shopping would be reduced due to election distraction in August.

delta air linesCEO, Ed Bastian said In a CNBC interview this month The company expects the carrier’s revenue to be impacted by lower demand before and after the elections.

“I think consumers will take a little bit of a pause in making investment decisions, whether it’s discretionary or other things,” he said. “I think you’ll hear other industries talking about it as well.”

For retailers, cold and winter weather is always on the Christmas wish list.

The season can get shoppers into the holiday spirit and get them in the mood to buy chunky sweaters, coats and gifts, said Evan Gold, executive vice president of Planalytics, a Philadelphia-based company that advises retailers on seasonal inventory planning.

“There is no external factor that impacts consumer purchases as directly, repeatedly and immediately as the weather,” he said.

This year, the early fall has been more difficult. The holiday shopping season, marked by October sales events, has now officially begun with unseasonably warm temperatures in San Francisco and other parts of the country and severe storms in North Carolina and Florida. This reduces buyers’ desire to purchase sweaters, coats and artificial trees.

Yet this year’s weather will ultimately help retailers, Gold said, as November and December temperatures are expected to be cooler than a year ago. He said changes in the weather, such as a dusting of snow or a cold breeze, can help signal to buyers that they are ready for the season.

Many families will be trying to recover from storm damage instead of buying holiday gifts, which could redirect money to furniture, clothing or home repairs, NRF chief economist Jack Kleinhenz said on a call with reporters. .

“It will just be an adjustment to their budget in terms of what they will spend, but it’s really too early to know the full impact on retail,” he said.

Home Depot hopes the same. It removed holiday products from its 124 big-box stores to make room for items that hard-hit areas need, such as shingles and drywall, Allen said. Instead, he said, it plans to sell a more limited assortment of items like wreaths and its best-selling trees in those stores.

“They are trying to rebuild and rebuild their homes,” he said. “So obviously, they’re not going to buy a nine-foot deer and put it there.”

Thanks to the calendar, the holiday rush can be intense.

Shoppers will have five fewer days between Thanksgiving and Christmas this year than last year — which could reduce spending or potentially allow time-pressed shoppers to get gifts through quicker shipping, curbside pickup or other quick options. May inspire you to seek.

Retailers will be under pressure to make the most of each day and provide convenience, NRF’s Shay said, as shoppers rush to get what they need and expect goods to arrive within a few hours or at least a few days. Will reach within.

“There are short-term consequences and implications and one of them, certainly, will be a shortened shipping season,” he said.

On a recent visit to the store, Kohl’s Chief Marketing Officer Christy Raymond said the retailer expects it will have to work harder to lure customers, especially low- and moderate-income shoppers who may be experiencing the cumulative effects of inflation. Feeling stressed and short of time.

“We think they’re feeling more pressure than last year,” Raymond said. And, he said, shoppers have also said they are “feeling pressed for time.”

To appeal to those consumers, Kohl’s wants them to have more things than they need, said Nick Jones, chief merchandising and digital officer.

The retailer has increased its offering of gift items, added more party dresses and begun selling a wider range of decorations, including Christmas trees, lawn ornaments and wrapping paper.

“We want to be a vacation destination,” he said. “We haven’t got food, but we’ve got everything else.”