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Holiday Retail Forecast 2014 Part I: Industry Predictions And The Importance Of Omni-Channeling

Josh Wolonick

For more, see Part II of this story.

The holiday shopping season is the retail industry’s bread and butter. Those few weeks — accounting for nearly 40 percent of most stores’ annual sales — are rapidly approaching.

As retailers begin to tighten their marketing and supply chains, analysts are making the usual attempt to forecast exactly what the season will bring.

Big, Bright Forecast

One source, the National Retail Federation (NRF), is very optimistic, expecting November and December sales for all purchases excluding auto, gas and restaurant sales to reach $616.9 billion, an increase of 4.1 percent over 2013. Last year, sales grew "only" 3.1 percent.

NRF’s chief economist, Jack Kleinhenz, justifies the prediction of a bump in sales by pointing to increased consumer purchasing power: Nominal disposable personal incomes have risen 4 percent over the last three months, while that figure was between 2 and 2.5 percent at this time last year.

Related Link: Holiday Retail Forecast 2014 Part II: Online Presence, Cloud And Mobile And Small Retailers

As he said in an NRF press release, “In the grand scheme of things, consumers are in a much better place than they were this time last year, and the extra spending power could very well translate into solid holiday sales growth for retailers; however, shoppers will still be deliberate with their purchases, while hunting for hard-to-pass-up bargains.” Furthermore, the NRF expects online sales to spike 8 to 11 percent higher than last year.

The major consulting firm Deloitte said in September that it also predicted holiday sales rising from 4 percent to 4.5 percent, but not everyone is so upbeat.

A Gloomier Forecast

According to data from the multinational professional services network PricewaterhouseCoopers, the average amount spent on holiday shopping per household will decrease by 6.9 percent. Moreover, the firm projects that households making less than $50,000 will cut their spending by 13 percent, to $377.

Though the holiday sales forecasting jury is still out regarding total sales, retailers are preparing for what is by far the busiest time of year.

Almost Certain Forecast: Omni-Channeling

Becky Boyd, vice president of marketing services at the PR agency MediaFirst, told Benzinga, “Online orders will generate more sales than in-store sales this year, so retailers must be prepared to fulfill orders either from storefronts or a distribution center.”

She made the case that omni-channel retailing, which gives the customer the ability to order any product from any location, online or in-store, will be more important than ever this year. This will require heightened efficiency between distribution centers, fleet transportation and stores themselves. Moreover, as she told us, “Customers want their orders faster, so retailers are offering same-day or next-day home delivery.”

For more, see Part II of this story.

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