FTI Consulting's Study Expects 3.5% Jump in Holiday Sales
Recent research by global business advisory firm FTI Consulting, Inc. (FCN) projected nominal holiday sales to register a 3.5% increase this season. This indicates a healthy pickup from the disappointing holiday performance of 2013, which saw the slowest pace of sales increase of 1.8%, since the end of the recession.
FTI anticipates holiday sales to show a marked year-over-year improvement, but still be weak from a historic perspective.
Gradual recovery in the housing market, a strengthening manufacturing sector, and an improving labor market are indicating a steady recovery in the U.S. economy. Moreover, consumer confidence has improved. Another trend that has become common among retailers is the opening of stores early on Thanksgiving evening. Retailers such as Macy's, Inc. (M), Sears Holding Corp. (SHLD) and Kohl’s Corp. (KSS) are opening their shutters early to draw in traffic.
Stronger economic growth notwithstanding, the reality remains that much of the recovery has not translated into consumer spending. In spite of firmer financial footing, consumers still remain cautious.
Moreover, the aggressive promotional tactics that gained ground in 2013 is still continuing in the retail landscape. Deep discounting trends may erode margins and upset bottom-line.
Fragile macroeconomic conditions continue to drive unpredictable changes in the consumer retailing business. Retailers are striving to adjust to the changing demographics, specifically the much weakened pricing power and lasting shifts in consumer attitude. This season, a few retailers like Michael Kors Holdings have already committed to better discipline with regard to price discounting, and will refrain from offering major deals.
Increased focus on high-margin products, improved sales mix in line with recent sales trends and launching promotional strategies early on to leverage e-commerce are some of the strategies retailers can adopt to boost profitability this season.
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