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US holiday season in 2015 could be weakest since recession
[NEW YORK] Upper middle-class shoppers spooked by a whipsawing stock market and shoppers waiting till the last minute for the best deals could result in the weakest US holiday sales season for retailers since the recession, AlixPartners said.
The consultancy firm said it expects sales to grow 2.8 per cent to 3.4 per cent during the November-December shopping period compared with 4.4 perc ent in 2014, based on analyzing consumer spending trends so far this year.
This forecasted increase is on the low end of holiday sales performance since 2010, AlixPartners said in an advanced copy of a report given to Reuters. Holiday sales have averaged 3.9 per cent in the last five years, the firm said.
AlixPartners' forecast, due to be published on Wednesday (Sept 23), is the first estimate to be released among industry and consultancy groups and excludes sales from automotives, restaurants and gasoline. The more closely watched National Retail Federation forecast for holiday sales is expected in early October."What we are seeing is that consumers' behavior this year in terms of increased retail sales is fairly muted," said Noam Paransky, director of AlixPartners' retail practice and one of the authors of the report. "A lot of the ingredients that drive retail revenue...aren't there," he said pointing to slow US economic growth, low inflation and population growth.
US consumer sentiment hit its lowest in a year in early September as households expected slower growth abroad to hit the US economy, a survey released by the University of Michigan showed. Consumers' expectations for current and future personal finances also took a knock.
Even though unemployment levels are decreasing and gas prices are falling, stagnant wage growth is forcing middle- and low-income consumers to spend prudently, Paransky said.
Dollars saved at the pump are being directed to personal savings or on non-retail activities, such as holidays, instead of discretionary items.
Higher income consumers are also expected to rein in spending after seeing their stock portfolios oscillate, due to the turmoil in the global stock markets following the devaluation of the Chinese yuan and the Federal Reserve's decision to hold off raising interest rates.
AlixPartners said retailers that promote early and often and continually monitor competition to make adjustments as well as keep the consumer engaged are expected to be winners.
The company did not provide additional details on the companies that would perform the best this holiday season.