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Forecasting the 2018 Holiday Retail Season

Employment is strong. Consumer confidence is high. Wage growth is up. Most signs point to a strong holiday retail season, but will growth rates improve over past seasons? Prevedere’s leading indicators forecast a positive growth for the 2018 holiday retail season. Whether it will eclipse past years remains to be seen.

The last five consecutive holiday seasons have seen consistent 3-5 percent growth for retailers. However, past performance isn’t enough to predict that 2018 will do the same. Retailers need to look at leading indicators for a more accurate picture.

Prevedere’s Retail Indicator Shows Signs of Growth

While retailers will likely perform well in 2018, they may not see last year’s solid 5.5 percent growth. Using a composite of proven economic factors, Prevedere expects slower year-over-year holiday retail growth for the first time since 2013.

While wage gains have gone up, inflation is also ramping up. Coupled with rising interest rates and low personal savings rates, these could point to slower growth in spending by consumers this holiday season relative to past years.

Trade tariffs also pose a threat to sales as higher costs get transferred to consumers, particularly in electronics, toys and other items from China.

Prevedere includes these trends and more in its composite retail leading indicator, providing an indication for which direction overall consumer demand is likely to go.

Three 2018 Holiday Retail Season Categories to Watch

Though holiday sales may not grow as much this year, three categories, in particular, stand out as ones to watch:

  1. Luxury brands could see a bump in growth thanks to high consumer sentiment and additional disposable income from the Tax Cuts and Jobs Act of 2017.
  2. The Apparel & Footwear category has experienced flat or slow growth since 2013. Yet, the rise of “athleisure” apparel and other trends could push up sales in this category through the holiday season.
  3. Despite tariffs and slow growth for retailers that sell Consumer Electronics, there are some positive indicators that could bode well for a positive holiday season, such as demand from millennials and moms.   

For a thorough explanation of the leading indicators and trends that predict demand for these categories this holiday season, watch Prevedere’s full 2018 Retail Holiday Outlook webinar.

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What other mistakes have you seen retailers make? Who do you think is doing it right? Tell us in the comments below, and check out some of our case studies of retailers using data and predictive analytics here.

 

Data and Analytics StrategyFor an in-depth discussion of the five-steps to turn retail data, into better decisions, including a list of the primary leading indicators affecting the retail industry, download Prevedere’s retail analytics playbook here.

 

 

2018-11-19T17:08:26+00:00November 15th, 2018|

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