Economy Watch: Some Retailers Glum Ahead of Holiday Sales Season
- Nov 12, 2015
The holiday shopping season is practically here – already here, if most retailers had their way – but are those very same retailers nervous about their prospects this year? Despite the recent healthy jobs report and the fact that (maybe) wages are finally going up? Macy’s, for one, isn’t particularly optimistic. The retailer, which also owns the Bloomingdale’s brand and as such is one of the major owner-occupants of anchor locations in malls nationwide, said on Wednesday that sales in the fourth quarter – usually the strongest of the year for the company, because of holiday traffic – would be lower than last year.
The department store chain cited poor demand from U.S. consumers, but also a slowdown in visits from foreign shoppers, whose euros and yen and yuan don’t go quite as far on American shores as they did in recent years, considering the strength of the dollar. “Spending by domestic customers remained tepid, especially in key apparel and accessory categories,” Macy’s CEO Terry Lundgren said in a statement. “Simultaneously, the slowdown in buying by international visitors continued to significantly impact Macy’s and Bloomingdale’s.” Earlier this year, the chain said it was closing 40 of its roughly 800 stores, and on Wednesday the company said it might close more.
Then again, that’s only Macy’s, which happens to be a department store. If sales are any indication, and they’re pretty much the only one that matters in the retail game, then department stores — a 19th-century invention — aren’t particularly welcome in the 21st century. Eventually something will have to be done with the space many of them occupy.
As a whole, on the other hand, retailers might have a decent Christmas. Last month, the National Retail Federation said that it expects sales in November and December (excluding autos, gas and restaurant sales) to increase 4.1 percent to $616.9 billion, which is higher than the 2013 to 2014 increase, which came in at 3.1 percent. Holiday sales on average have grown 2.9 percent each year over the past 10 years – up to and including 2014 – and are expected to represent about 19.2 percent of the retail industry’s annual sales of $3.2 trillion. If the NRF’s predictions are correct, this holiday season would mark the first time since 2011 that holiday sales would increase more than 4 percent.
One more bit of holiday retail sales news: so far, no major retailer is opening any earlier on Thanksgiving Day this year than they did last year, which is around 6 pm to 7 pm. It turns out that adding shopping hours on a day when previous generations would never dream of shopping isn’t really inspiring more sales, as the retailers hoped it would. The extra hours are mostly just spreading sales out more over the holiday weekend. Also, shoppers aren’t that excited about buying on that day. According to a report by the ICSC on Monday, about 41 percent of holiday shoppers plan to head to stores on Black Friday, which is the most of any holiday shopping day. But only 12 percent of them plan to do so on Thanksgiving Day.