Retail sales this holiday season are expected to surpass $1.1 trillion, up 4.5-5% year over year, per a recent report from Deloitte, cited by CNBC.
Moreover, ecommerce sales are expected to grow between 14% and 18%, better than 11.2% in 2018. Further, digital sales of retailers are estimated between $144 billion and $149 billion.
Holiday season sales are expected to be fueled by robust jobs growth, rising wages, and low unemployment rate despite concerns over the ongoing U.S.-China trade war and looming threat of a recession in the United States.
Resilient U.S. Economy Aids Sales
Notably, the U.S. economy added 130,000 jobs in August. Per Labor department data, the unemployment rate was unchanged at 3.7%, just above a 50-year low.
Moreover, the hourly wage rate increased 0.4% in August compared with 0.3% in July. Year over year, wage rate increased 3.2% in August compared with the consensus estimate of 3%.
These factors are fueling solid consumer spending that accounts for more than 70% of the U.S. economy.
Per the latest Department of Commerce data, U.S. retail sales for the month of August increased 0.4%, which surpassed the consensus estimate of 0.2% growth.
Ecommerce Dominates Retail Space
The encouraging August data and Deloitte’s better-than-expected projections bode well for retailers, particularly ecommerce providers like Amazon AMZN, eBay EBAY, Etsy ETSY, Walmart WMT and Target TGT. These companies are rapidly penetrating the retail space, thanks to changing consumer shopping patterns and digital transformation.
Notably, eMarketer expects the U.S. ecommerce market to see double-digit growth in 2019, accounting for more than 10% of total U.S. retail sales for the first time in history. Moreover, U.S. consumers are expected to spend $586.92 billion on ecommerce in 2019, which indicates 14% growth over 2018 and will account for 10.7% of total U.S. retail spending.
Let’s dig deep to find out how major ecommerce providers are preparing for the upcoming holiday season.
Focus on Delivery Speed
Amazon’s strong distribution capabilities and concerted efforts to bolster its last mile delivery initiatives (including same-day delivery, one-day shipping and other fast delivery services) is expected to boost its customer base in the holiday season.
Notably, the Prime Free One Day service now covers more than 10 million products. AmazonFresh, which enables Prime shoppers to combine grocery orders with Amazon bestsellers and receive delivery at their doorsteps in two hours, is now in a number of cities.
Additionally, this Zacks Rank #3 (Hold) company recently introduced a two-hour delivery service of natural and organic products from Whole Foods Market in additional cities in the United States. Moreover, the company launched an electric drone, which is capable of delivering packages weighing 5 pounds within half an hour.
Consumers look for more convenience and speed during the busy holiday season. Amazon’s efforts to expedite the process will definitely lend it a competitive edge.
However, the company’s dominance is being threatened by Walmart, which recently unveiled a plan to extend its Grocery Delivery membership offering — Delivery Unlimited — to 1,400 stores by this fall.
This Zacks Rank #3 company is expanding same-day delivery service supported by partners like Deliv and the Parcel buyout. Walmart also collaborated with ride-hailing services Uber and Lyft for speeding up delivery of groceries.
Meanwhile, with regard to grocery delivery, Walmart’s partnerships with Point Pickup, Skipcart, AxleHire and Roadie have expanded same-day delivery in metro areas of four states.
Moreover, Target’s huge investments to strengthen same-day delivery services are expected to boost its market share. The company’s Shipt buyout is a key catalyst in this regard. Notably, Shipt operates in more than 1,500 outlets across 200 markets.
Further, the company is set to launch a loyalty program — Target Circle — nationwide on Oct 6. The program will provide customers with a more convenient and customized shopping experience in the upcoming holiday season.
Additionally, Target, which carries a Zacks Rank #2 (Buy), offers a two-day shipment facility. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
eBay & Etsy’s Eye-Catching Ad Tactics
Ecommerce providers eBay and Etsy have started their holiday season marketing promotions.
eBay’s recent holiday season-related ad poked fun at Christmas Creep, which is an industry term for holiday merchandise and marketing that takes place far ahead of Thanksgiving. The Zacks Rank #3 company stated that it’s in no hurry and will start promotions only post Halloween.
The ad, which apparently reflects eBay’s customer-centric approach, is intended to lure deal-hungry early shoppers.
However, Etsy, another Zacks Rank #3 company, is not willing to wait till November. The Brooklyn-based company recently initiated an ad campaign highlighting different seasonal products and their makers.
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