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Forecast: Holiday sales to increase by 4%

Holiday Sales

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NEW YORK — Retailers can expect a 4% year-on-year sales bump in the holiday months of November and December, according to a forecast from Coresight Research Inc.

“A steady economic backdrop frames this year’s holiday shopping season. Higher wage growth and lower gas prices point to the potential for higher sales,” the research firm says in its “U.S. Retail Outlook.”

Coresight Research projects the increase despite “the shortest possible holiday calendar,” with six fewer days between Thanksgiving and Christmas than in 2018.

The report updates Coresight’s earlier estimate of a holiday sales increase of between 3.5% and 4%. “Lower gas prices are a plus for holiday spending, providing as much as an incremental 50 basis points year over year,” according to the update.

Overall, Coresight foresees a mixed outlook for U.S. retailers, partly because of economic headwinds around tariffs and hints of recession but also due to the impacts of 24/7 shopping and online purchasing.

“We see the ongoing trend of holiday shopping becoming less important to key retailers: The season accounted for almost 24% of all sales in the late 1990s, but has slowly but steadily slipped to 21% and we expect that trend to continue,” the report says.

Coresight Research forecasts that digital shopping will account for about 23% of all nonfood retail sales this holiday season, or an increase of 200 basis points from the final two months of 2018.

One reason for optimism is that retail sales (excluding autos and fuel) have increased 4.1% over the past three months, Coresight says. “With hourly wages continuing to increase, strong monthly retail sales reports and lower gas prices freeing up additional dollars for discretionary spending, we now see momentum continuing through the holiday season.”

As for risks, the report notes that consumer confidence took a hit after President Trump postponed tariffs on some consumer goods imported from China, including cell phones, toys and video game consoles, until December 15. Meanwhile, China retaliated with tariffs on $75 billion of U.S. merchandise.

“With Congress announcing a formal impeachment inquiry of President Trump on September 24, we expect more uncertainty in politics and headwinds for consumer sentiment,” according to the report. “Moreover, this type of political news could direct consumers’ attention toward the ongoing political dialogue and away from purchase considerations. However, at 92.0 in September, the Consumer Sentiment Index reading compares with a 10-year average of 84.5.“

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