Solid economy has retailers expecting big holiday shopping season

Courtesy of the CDC

Consumer confidence, income growth and a low unemployment rate will push holiday retail sales 5.8 percent higher this year, according to a projection of the research company eMarketer.

The company is slightly more bullish on the holidays than the National Retail Federation, which said last month that it expects consumers to spend between 4.3 percent and 4.8 percent more in November and December than during the same period last year.

Both eMarketer and the NRF said rising wages, high consumer confidence and the low unemployment rate would be pushing people to spend more over the holidays.

The NRF projects that consumers will spend an average of $1,007.24 this year, up from $967.13 last year, based on a survey of 7,313 adults conducted in early October.

And while online retailers are expected to see faster growth than their brick-and-mortar brethren, traditional stores still will see growth and still account for the vast majority of overall sales.

Courtesy of the National Retail Federation

According to eMarketer, e-commerce retailers will see holiday sales increasing 16.6 percent this year, but those will account for less than 13 percent of overall retail sales. Retailers with a physical location will sell 4.4 percent more than last year, the company said, and account for nearly 88 percent of all retail sales over the holidays.

“While ecommerce will continue to see strong double-digit gains, brick-and-mortar retail should be a particular bright spot this holiday season,” said Andrew Lipsman, principal analyst at eMarketer. “Not every brick-and-mortar retailer is thriving, and several have shut their doors this year, but others are really capitalizing on the strong consumer economy. Retailers are luring in shoppers with remodeled stores, streamlined checkout and options to buy online, pick up in-store.”

The U.S. Census Bureau said that September retail sales were $509 billion, up 4.7 percent from September 2017.

Local independent businesses, too, are launching and modifying promotions to urge Louisvillians to shop at locally owned establishments.

Jennifer Rubenstein | Courtesy of LIBA

Louisville Independent Business Alliance Director Jennifer Rubenstein told Insider Louisville via email that though proprietors of small local businesses tend to focus on Small Business Saturday — rather than Black Friday, but LIBA once again is holding its hoLOUdays Contest, in which shoppers at local businesses can win $1,000 and increase their chances every time they visit a LIBA member retailer between Tuesday and Jan. 2.

Higher projected consumer spending on holiday gifts also has prompted local logistics companies to step up hiring to help find items in warehouses, place them in packages and drive them to customers. Logistics company Radial said in September that it would hire about 6,500 seasonal employees, up 16 percent from last year, for its warehouses. Amazon held events over the summer to fill 1,000 new, full-time positions at its Shepherdsville and Jeffersonville, Ind., locations. And UPS has said that it plans to hire about 100,000 seasonal workers, including 2,600 in Louisville.

Both the NRF and eMarketer said that worsening international trade relations likely will have little impact on consumers’ willingness to buy presents this season. However, both organizations warned that consumers probably will have to dig deeper into their pockets beginning next year.

“Although some economic headwinds are finally beginning to form after mostly blue skies in 2018, we expect their effects to be muted until after the holidays,” eMarketer said. “Retailers have built up inventories for products affected by tariffs on imports from China and are not expected to pass on notable price increases to consumers until 2019.”

Some of Louisville’s largest employers, including Ford Motor Co. and GE Appliances, have said that they are incurring hundred of millions of dollars more in raw materials costs because of tariffs instituted by the administration of President Donald Trump. At least some of those costs are being passed on to consumers.

Brick and mortar stores have one additional hurdle to overcome this year as they’re competing with e-commerce giants: free shipping. Amazon last week announced that during the holidays all customers would get free shipping, even if their orders total less than $25. That may lure more shoppers, but analysts also warned that if customers don’t get their presents in time, the move could backfire.