Bells will be ringing this holiday season for the nation’s retailers who are likely to see an increase in sales. But thanks to sluggish wage growth, the season still won’t be as jolly as it typically was before the Great Recession.
Consultancy Kantar Retail predicts that sales will rise 3.7% during the all-important fourth quarter when some store chains make as much as half of their revenue for the year. But the expected uptick lags behind the 4.5% to 5% growth that was the norm before the economic downturn that struck in 2008, says Doug Hermanson, Kantar’s principal economist.
“Income growth has been below that 4% for most of the post-recession period,” he said. “It’s just not realistic, given the kind of weak spending power we’re seeing, to see growth break through that 4% ceiling.”
The ability of shoppers to browse and buy from behind a keyboard without setting foot inside a store has upended the retail industry, and this holiday season, online sales are expected to continue accelerating, increasing 16% as compared to last year.
“It’s online’s season to win,” Hermanson said. “Some of that is going to come at the expense of in store, and brick and mortar demand this holiday.”
Macy’s, Sears and Rue 21 are among the traditional retailers who have been shuttering stores amid increased competition from Amazon and other trends such as the rising popularity of fast fashion. Still, brick and mortar stores are expected to be a bit busier this holiday season, experiencing a roughly 1.5% bump in sales as compared to the 0.5% uptick they saw last year.
Sales will likely be key to drawing shoppers through the door, as promotional events like Black Friday that used to last for less than 24 hours continue to stretch out over several days.
“Discounting has always been a big part of the holiday,” Hermanson says, but “these windows of promotions have tended to creep further back into early November or mid-November.”
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