NRF forecasts holiday sales surge
Retailers are gearing up for the holiday season in hopes for a surge of sales, however, sales are not supposed to swell as much as last year, the NRF reported.
The National Retail Federation announced that it expects holiday retail sales in November and December – excluding automobiles, gasoline and restaurants – to increase between 4.3 and 4.8 percent over 2017 for a total of $717.45 billion to $720.89 billion. The forecast compares with an average annual increase of 3.9 percent over the past five years.
“Our forecast reflects the overall strength of the industry,” NRF President and Chief Executive Officer Matthew Shay said. “Thanks to a healthy economy and strong consumer confidence, we believe that this holiday season will continue to reflect the growth we’ve seen over the past year. While there is concern about the impacts of an escalating trade war, we are optimistic that the pace of economic activity will continue to increase through the end of the year.”
Holiday sales in 2017 totaled $687.87 billion, a 5.3 percent increase over the year before and the largest increase since the 5.2 percent year-over-year gain seen in 2010 after the end of the Great Recession. These sales are critical to the industry. For some retailers, November and December can account for up to 40 percent of annual sales.
“Last year’s strong results were thanks to growing wages, stronger employment and higher confidence, complemented by anticipation of tax cuts that led consumers to spend more than expected,” NRF Chief Economist Jack Kleinhenz said. “With this year’s forecast, we continue to see strong momentum from consumers as they do the heavy lifting in supporting our economy. The combination of increased job creation, improved wages, tamed inflation and an increase in net worth all provide the capacity and the confidence to spend.”
Even with the increasingly tight labor market, retailers have been preparing for their busiest season of the year by hiring extra staff to help meet the demand expected during November and December. As part of its forecast, NRF expects retailers to hire between 585,000 and 650,000 temporary workers this holiday season, up from last year’s 582,500.
The labor market is forcing retailers to rethink their approach to hiring as a smaller pool of workers seeks more flexibility, training and pay. Many retailers who saw the labor market tighten several years ago responded by increasing wages and improving benefits. Most notably, Walmart increased its starting wages each of the past three years, prompting other retailers to raise their entry level wages. Other retailers have employed more unconventional methods to position themselves as an employer of choice. For example, the Buc-ee’s chain of more than 30 convenience stores opened a new location in the Houston suburb of Katy last year and sign hung above the exit lets shoppers and potential job-seekers know hourly pay rate by type of position and benefits such as three weeks of vacation and 401K.
According to the company, all team members hired after Sept. 16 will begin at $12 an hour minimum wage, part of Target’s commitment to increasing its minimum hourly wage to $15 per hour by the end of 2020. In addition, seasonal team members will be able to take advantage of other benefits, including:
A 10 percent discount at Target stores and Target.com
An additional 20 percent merchandise wellness discount on fruits and vegetables and all Simply Balanced and C9 Champion merchandise
The opportunity to earn holiday pay on Thanksgiving and Christmas
Flexible schedules that allow team members to work a variety of hours