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Is a record-setting $1T retail holiday season in the offing?

By Jackie Crosby, Star Tribune (Minneapolis)
Published: November 29, 2019, 6:00am

The unofficial start of the holiday shopping season is upon us.

No longer a one-day dash for doorbusters, retail watchers now count the five days between Thanksgiving and Cyber Monday as the holiday season’s curtain raiser.

If Christmas creep and increased traffic touches off your inner grouch, consider that retail is America’s largest private-sector employer, supporting one in four U.S. jobs and adding $2.6 trillion to annual GDP.

The upcoming holiday season presents a mixed bag for retailers, analysts say. Consumers feel pretty good about their household finances. Wages have inched up and the unemployment rate is hovering near a 50-year low.

As Target Corp. Chief Executive Brian Cornell told reporters last week: “There is no indicator as we sit here today that the consumer environment is slowing as we enter the holiday season.”

But an undercurrent of uncertainty exists, with hints of a recession and the lingering overhang of tariffs and a trade war. A late Thanksgiving could put pressure on retail growth, and promotions may cut into profits.

As the crucial holiday season gets underway, here are some defining trends and expectations for the coming months.

The outlook

The 2019 holiday could mark retailers’ first ever trillion-dollar shopping season, according to a number of market research firms, including Deloitte and eMarketer.

Deloitte forecasts a bump in sales as high as 5 percent compared with last year. The nation’s largest retail industry group, the National Retail Federation, expects consumers to spend an average of $1,048 during the holiday shopping season. NRF’s crystal ball readers predict a 4.2 percent increase at the high end.

Consumer buying patterns can flicker. Last year’s holiday sales came in below forecasts, growing by 2.1 percent to $686 billion, as a government shutdown, rising trade tensions and a late-December stock market plunge merged into a trifecta that spooked consumers.

Yet even with double-digit growth in e-commerce and shifting attitudes to seek out experiences over stuff, most researchers say the extended Black Friday weekend has not lost its luster.

“There’s always going to be an appetite for consumers to think about their shopping plans, whether they’re doing it in their pajamas or doing that at 4 a.m. in front of a brick-and-mortar retailer,” said Michael Sansone, a Minneapolis-based leader in the consumer and retail practice of global consultant A.T. Kearney. “Regardless, they’re going to be in a shopping spirit.”

The calendar crunch

A turn of the calendar leaves six fewer shopping days between Thanksgiving and Christmas this year. The compressed time frame could weigh on retailers’ profit potential as it robs them of that extra weekend of potential sales. But consumers could see more deals as retailers compete for dollars.

More than half of retailers surveyed by RetailMeNot and Kelton said they plan to offer deeper discounts than usual. Most began running deals earlier this year.

Walmart started its holiday sales Oct. 25. Kohl’s held a “holiday kickoff” Nov. 1.

It might be working. Between Nov. 15 and Nov. 21, Nordstrom Inc. saw web revenue almost double while Walmart’s grew 67 percent in a recent survey of U.S. retailers by Edison Trends.

“It’s likely to be very competitive out there in terms of pricing,” said Retail Metrics analyst Ken Perkins. “There should be some good deals for consumers.”

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