Retailers are in for a happier holiday season

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Retailers are in for a happier holiday season

By Gina Acosta - 09/20/2017

Retail holiday sales should rise a healthy 4 to 4.5 percent over last year's shopping season, according to Deloitte's annual retail holiday sales forecast.

Deloitte's retail and distribution practice expects total holiday sales (seasonally adjusted and excluding motor vehicles and gasoline) to reach $1.04 to $1.05 trillion between November and January.

Additionally, Deloitte forecasts an 18 to 21 percent increase in e-commerce sales in 2017 compared with 2016. E-commerce sales are expected to reach $111 to $114 billion during the 2017 holiday season.

"The projected uptick in holiday sales ties to four primary factors affecting consumer spending, starting with anticipated strong personal income growth," said Daniel Bachman, Deloitte's senior U.S. economist. "Last year, disposable personal income grew 2 percent over the year to the holiday period, and we may see that rise to a range of 3.8 to 4.2 percent this season. Consumer confidence remains elevated, the labor market is strong and the personal savings rate should remain stable at its current low level."

While fundamentals remain positive, Deloitte's economist also cited potential uncertainties that could affect income growth and bring the forecast in at the lower end of the range, such as an increase in the savings rate that would cause spending to expand more slowly. The threat of a government debt ceiling crisis – which has loomed over prior holiday seasons – could also cut employment and income growth. The impact of the unusually active hurricane season remains too early to project, as it could depress spending or increase it, particularly in the home improvement sector, due to rebuilding activity.

"Sentiment and spending indicators are firing on all cylinders, but the question is: How will retailers respond given the profound disruption across the industry?" said Rod Sides, vice chairman, Deloitte LLP and U.S. retail and distribution sector leader. "The good news is retail is thriving, and it is the proliferation of new, niche retailers that is resulting in share constantly changing hands. Consumers have unlimited alternatives and often bounce between brands, touchpoints and influencers, making it more difficult for retailers to attract shoppers without some level of customization. These disruptive factors are likely to combine to create a highly competitive and promotional holiday season. Retailers should modify their assumptions about what drives traffic, engagement and holiday sales growth, and realign around customer experience, creating relevant, emotional and inspirational connections that go beyond just product, price and assortment."

Deloitte is forecasting a 4 to 4.5 percent increase in 2017 holiday sales compared with 2016. Retail sales between November 2016 and January 2017 (seasonally adjusted and excluding automotive and gasoline) grew 3.6 percent and totaled $1.0 trillion according to the U.S. Commerce Department.

Deloitte is forecasting an 18 to 21 percent increase in 2017 e-commerce sales compared with 2016. E-commerce sales between November 2016 and January 2017 (seasonally adjusted and excluding gasoline stations, motor vehicles and parts dealers and food services) grew 14.3 percent totaling $93.8 billion.

Retailers have been getting an early start on their seasonal hiring efforts, with Target announcing this month that it will hire 40% more workers during the holidays this year.

The retailer said seasonal hires, an increase of 30,000 workers from the 70,000 people it hired last year, will stock shelves at its more than 1,800 stores or fulfill online orders that customers pick up in stores. In addition, it plans to hire 4,500 people to help pack and ship online orders at its warehouses.

Target joins Ulta Beauty, Kohl's, Michaels, Williams Sonoma and other retailers who have jumped on holiday hiring early.

Walmart said it plans to meet its need for extra work during the holiday shopping season by giving existing employees more hours, according to a release from the company.

Amazon has also not announced its holiday hiring spree plans.

Online fulfillment company Radial says it will bring on more than 27,000 seasonal workers to support retailer demand for fulfillment and customer care talent during this peak holiday season.

"Radial has the second-largest holiday workforce and eCommerce fulfillment footprint behind Amazon, executing 10 million orders during the 2016 peak season," said Sean McCartney, EVP, Operation Services, at Radial. "During the critical holiday rush, retailers struggle more than ever to convert eCommerce revenue, capture market demand and deliver on the customer experience. This make-or-break season is truly powered by the hard work of dedicated seasonal employees, which is why Radial will expand our workforce by 400 percent to ensure holiday packages arrive on schedule and retailers offer the customer service expertise they often can't deliver on their own."  

According to the National Retail Federation, retailers will hire upwards of 650,000 over the next few months.

Target has previously said that it would slash prices on cereal, paper towels and thousands of other items. The company said Wednesday that it wants to ensure that the experience for customers is seamless at stores.

Target Corp. said it will hold nationwide hiring events from Oct. 13 through Oct. 15.