elections, hurricanes to affect retail spending

Inflation may be subsiding, but retailers are still looking ahead to the holiday season with a lot of uncertainty.

some difficult to predict factors It will decorate the halls and influence consumer spending as they search for the perfect gift. Unstable weather, election chaos and a deal-seeking mentality could determine the season. And there are fewer days between Thanksgiving and Christmas than last year. It will put shoppers on the clock.

Still, there are reasons for retailers to be optimistic. Shoppers are feeling brighter and planning to spend more than they did last holiday season, according to an annual survey by consulting firm Deloitte and separate forecasts from the National Retail Federation.

According to the National Retail Federation, holiday spending in November and December is expected to increase by 2.5% to 3.5% compared to 2023, to a range of $979.5 billion to $989 billion. This is a modest increase compared to the 3.9% year-over-year increase during the 2022-2023 holiday season, when spending totaled $955.6 billion. NRF’s numbers do not include car dealerships, gas stations or restaurants.

Shoppers expect to spend an average of $1,778 this holiday season, an 8% increase from last year’s holiday season, according to research from consulting firm Deloitte. The survey, conducted in late August to early September among approximately 4,000 consumers, found that increased spending was due to a more favorable economic outlook, a perception among respondents that prices would rise, and The reason for this is that households with higher incomes are more willing to spend. Annual income is between $100,000 and $199,000.

Stephen Rogers, managing director of Deloitte’s Consumer Industries Center, said falling unemployment, a return to more typical inflation levels and recent Federal Reserve interest rate cuts are boosting consumer mood. said.

“Despite the political buzz, people are still in a good frame of mind,” he says. “When I look at my bank account and think about my financial situation, I feel better.”

A few weeks before trick-or-treating, shoppers experienced their first holiday sale.

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

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

“Our ability to seek contracts has really developed over the last two years and we’re going to continue to do that,” Rodgers said.

NRF CEO Matt Shea echoed that prediction. He said on a call with reporters this week that retail trade groups expect a more promotional environment this holiday season, with deals across more brands and categories than a year ago. .

Another potential challenge for retailers? Catering to customers who value décor and experiences over gifts. According to Deloitte research, consumers plan to spend 16% more on experiences year-over-year, but spending on gifts is down 3% compared to last year’s holiday period. Purchases other than gifts (including expenditures on: Decorative goods and party apparel are also expected to grow by 9% year-on-year.

The company’s research found that spending in the retail category will remain relatively flat, averaging $1,043 in 2024, compared to an average of $1,020 in 2023. Consumers across all income groups report value-seeking habits, including less gifting for themselves and more transactions at affordable retailers. Look for private labels and “fake” products that are more expensive.

Rogers said the changes could hurt retailers who sell products unless they come up with compelling ways to connect products and experiences, such as offering hiking equipment. Ta.

for home depotsells a wide range of holiday decorations, including Santa-themed cushions and giant animated reindeer for the garden, but high demand for decorations could present an opportunity. But the home improvement retailer said it is also prepared for consumers to look for value.

Home Depot has purchased more low-cost artificial Christmas trees this holiday season, including a pre-lit tree that sells for $49, said Lance Allen, senior decorative holiday merchant for the home improvement retailer. .

As Americans await the results of the presidential election, will they also do some holiday shopping?

This is a concerning issue for retailers and consumer brands. walmart and shark ninjaexpects shoppers to browse and buy rather than being glued to the news. The election will be held on Nov. 5, and if the race between Vice President Kamala Harris and former President Donald Trump ends as close as polls suggest, it could take several days to determine a winner. .

Mark Baroccas, CEO of SharkNinja, said this election is the “biggest unknown” that will shape the holiday season.

“It could be a moment, it could be nothing. If the news cycle is all-consuming, it could disrupt things for weeks,” he said. “Christmas is here, the holiday season is here. It’s a question of how many distractions there are.”

He said the election and associated news cycle could also influence how consumers feel about the economy.

Walmart’s internal survey suggests ‘positive feelings are increasing’ among shoppers Enjoy fall and get ready for Halloween, said Jen Acela, vice president of customer insights and strategy at Walmart.

“One of the things that’s still out there and moving is what happens in the election, and what happens in the election will determine whether this goes in a good direction or not,” she said.

Some companies are already blaming the election for a drop in sales. Amazon It claimed that the weak outlook for August was due to a decline in demand for online shopping due to the election, but some have derided this comment as an excuse.

delta airlinesCEO Ed Bastian said in an interview with CNBC this month that he expects lower demand around the election to hurt the airline’s bottom line.

“I think consumers will pause a little bit when making investment decisions, whether it’s discretionary or otherwise,” he said. “I think you’re going to hear other industries talking about it as well.”

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

Evan Gold, executive vice president of Planalytics, a Philadelphia-based company that advises retailers on weather-related inventory planning, said the weather is putting shoppers in the holiday spirit and making them stock up on thick sweaters, coats and gifts. He says it may make people feel like buying it.

“No external factor has a more direct, frequent, and immediate impact on consumer purchases than the weather,” he said.

This year’s early fall got off to a more eventful start. The unofficial kickoff to the holiday shopping season marked by the October sales event coincided with unseasonably warm temperatures in San Francisco and other parts of the country and severe hurricanes that hit North Carolina and Florida. So shoppers are less likely to want to buy sweaters, coats, and artificial trees.

But Gold said this year’s weather will ultimately help retailers, as temperatures in November and December are expected to be colder than a year ago. He said changes in the weather, such as snowfall or cold snaps, could signal shoppers to prepare for the season.

Jack Kleinhenz, NRF’s chief economist, said in a call with reporters that many families will try to rebuild from the hurricane damage rather than buy holiday gifts, which could free up funds for furniture or other items. He said the funds could be used for clothing and home repairs.

“It’s just a budget adjustment of what to spend, but it’s too early to know the full impact on retail,” he said.

Home Depot is hoping for the same. Allen said holiday merchandise was removed from 124 big-box stores to make room for items needed by hard-hit areas, such as shingles and drywall. Instead, the store will sell a more limited selection of items such as wreaths and best-selling trees, he said.

“They’re trying to rebuild their homes and recover,” he said. “So it’s clear they’re not going to buy a 9-foot reindeer and put it out there.”

The holiday rush could be even faster thanks to the calendar.

Shoppers this year have five fewer days between Thanksgiving and Christmas compared to last year, which may curb spending or encourage time-pressed shoppers to opt for expedited shipping, curbside pickup, or other faster options. It can be a motivator to seek ways to obtain gifts.

NRF’s Hsieh says retailers are making the most of every day because shoppers are getting what they need in a hurry and expecting their items to be delivered within hours, or even days at the earliest. , said there will be pressure to provide convenience.

“There are certainly implications and implications of shorter time frames, and one of them is of course that shipping times will be shorter,” he said.

During a recent store tour, Christy Raymond, Kohl’s chief marketing officer, said that Kohl’s customers, especially low- and moderate-income customers who feel stretched and pressed for time by the cumulative effects of inflation, said He said he expected more efforts would be needed to attract shoppers.

“I think they feel even more constrained than they did last year,” Raymond said. And shoppers are also saying they are “feeling pressed for time,” she added.

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

The retailer expanded its gift selection, added more party dresses and began selling a wide range of decorative items, including Christmas trees, lawn decorations and wrapping paper.

“We want to be a vacation destination,” he said. “We don’t have any food yet, but we have everything else.”