Upbeat Retail Forecast for 2018 Holiday Season
- Dec 19, 2018
Two reports from DBRS’ commercial real estate team are predicting a happy holiday shopping season for retailers in the U.S. and Canada, where strong economies on both sides of the border are enticing customers online and in the stores.
“There wasn’t a full migration to online shopping as some doom-and-gloom headlines might suggest,” Stephanie Hughes, DBRS business writer and one of the authors of both reports, told Commercial Property Executive. “There is still definite value in having a physical space and finding ways to leverage both online and offline.”
The reports, which analyzed preliminary reports from media and retail organizations like the National Retail Federation (NRF), Forbes, Statista, Adobe Analytics in the U.S. and Field Agent Canada and StatisticsCanada, suggested consumers are expected to spend more this year and are prepared to spend time at the mall and other brick-and-mortar retail locations. Citing the NRF’s latest holiday spending survey, the report said U.S. consumers are expected to spend 4.1 percent more this holiday season than in 2017. Family members can expect to find plenty under the tree this Christmas because the NRF said consumers should spend about $506 on gifts for family this year, up from $478 in 2018.
Canadians are also expected to be more generous with their gift-giving this year, DBRS found, with 42 percent of the population expected to spend more on presents for family and friends than they did last year. Only 21 percent of those surveyed expected to spend less, according to Field Agent Canada. In good news for brick-and-mortar retailers, DBRS pointed to a PwC Canada report noting 62 percent of those surveyed planned to shop in stores compared to 51 percent of Canadians who preferred e-commerce for their presents.
However, e-commerce is gaining ground on in-store sales and is projected to grow at a four-year compound annual rate of 7.7 percent between 2018 and 2022 in Canada, according to Statista. This year, online sales between Black Friday and Cyber Monday were up 23 percent, eShopWorld found.
One factor that may have an impact on e-commerce for the holidays this year in Canada was a labor dispute between Canada Post Corp. and its postal service workers, noted study co-author Ben Deutsch, vice president, Consumer & Retail, at DBRS. The argument was settled earlier this month but Deutsch said there are still ongoing delivery backlogs.
Order online, pick up in store
One retail trend that is growing on both sides of the border is ordering online and picking up in the store. Some retailers—such as Wal-Mart—have made physical changes to their stores to accommodate the on-the-go sales.
“The hybrid model is really taking off because of how convenient it is,” Hughes told CPE, adding the increased use of mobile apps by retailers and consumers has helped drive this trend. “It gives shoppers more options and gives them flexibility and convenience.”
The NRF found 50 percent of shoppers said they planned to use the hybrid shopping this holiday season, DBRS reported. This model increases store and mall foot traffic and encourages shoppers to make more in-store purchases. “There is a lot of value in actually having that consumer come into the space,” Hughes said.
E-commerce is still a growing part of the retail equation in the U.S., too. Last year, online sales made up 14.8 percent of the total U.S. retail trade, according to Statista. Those retail companies that can leverage their online presence in the most effective ways, such as ensuring website functionality, pricing and product selection, will likely have the most success this season.
“If you don’t have an online presence, that is very problematic these days,” Deutsch told CPE. “When you put all those pieces together, they are trying to leverage the two spaces together to create an environment where shoppers can get whatever they want and however they can get it.”
That was apparent on Cyber Monday this year, which was the largest online shopping day in history with $6.6 billion in revenues, according to Adobe Analytics. The largest contributor to that number was “mobile shopping through apps and company websites, many of which have been used to drive foot traffic into the store with the ‘order online, pick up in store option,’” the DBRS U.S. report noted.
Images courtesy of DBRS