The World Series is over and Halloween is upon us! It's later than you think and the reason why is that retailers are showing a tiny bit more restraint in terms of launching their holiday specials. The implications for consumer behavior and investing extend way beyond anything you're going to hear from the Fed about QE or government GDP data so listen up.
First the good news. According to a widely followed Deloitte holiday shopping survey consumers are feeling confident enough in the economy to spend more. Deloitte says consumers they surveyed plan to increase holiday spending by 13%. That number seems high but it's no surprise Americans are looking to buy stuff. That's what we do. What's notable about Deloitte's survey is that we're actually spending for people other than ourselves. For the first time in eight years Deloitte found a measurable uptick in the number of gifts we plan to give.
The other side of this is that the line between on and offline continues to blur and it means less entry level jobs. This week Costco (COST) said it will remain closed on Thanksgiving. A Costco spokesperson said, "Our employees work especially hard during the holiday season and we simply believe they deserve the opportunity to spend Thanksgiving with their families... nothing more complicated than that."
Allow me to complicate it by noting that Costco pays some of the highest wages in retail and, obviously, when stores aren't open workers relying on getting those extra hours won't get paid. Amplifying the point, Target (TGT) announced this week that it will be laying off 80 employees in its property development unit. The company will leave another 40 jobs in that same department unfilled.
As usual, the free market is way ahead of protest groups. While the media laps up stories of workers looking for as much as $20 an hour for part time retail jobs the industry is simply reducing headcount to match consumer desires. Online sales are growing twice as fast as offline by the most conservative measures. Amazon (AMZN) is opening stores while Walmart (WMT) and Target close locations. There is no more on or offline. Just shopping. That means thinner margins, higher package counts and fewer in-store unskilled jobs at any price. Get used to it.
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