This year’s holiday shopping season is expected to be one of the strongest in the past few years. Consumer deals ahead of Black Friday 2014 are well underway, key retailers say they’re upping their hiring levels over recent years, and online shopping—especially on mobile devices—continues to rise as time-pressed consumers prefer it for convenience. Yet blips are still possible.
The National Retail Federation expects holiday sales to climb 4.1 percent this year, to $616.9 billion outperforming last year’s 3.1 percent growth, the NRF reported. Over the past decade, growth averaged 2.9 percent.
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The critical holiday season can account for 20 to 40 percent of most retailers’ annual sales. Gas prices are nearing three-year lows, so more consumer money may go toward retail spending.
Last week Macy’s said it planned to hire 86,000 seasonal holiday workers this fall, up 3,000 from 83,000 last year. The company, expecting more sales online, is taking on about 10,000 workers to handle the extra online orders at megacenters in Arizona, Connecticut and elsewhere. Kohl’s is also stepping up holiday hiring. The retailer plans to hire more than 67,000 employees for this year’s holidays, up 34 percent from last year.
About 41 percent of consumers will spend more online this year than last, PwC reported. Yet 72 percent of households expect to spend less this holiday season overall in brick and mortar stores than last year – about $685 compared to $735 in 2013. PwC in particular notes the widening “spending divide” among shoppers.
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“The divide is creating two distinct groups – survivalists and selectionists,” said Steven Barr, a retail and consumer expert, on PwC’s website. “Retailers must cater to both segments. With shoppers coming to expect a seamless ‘omnichannel’ experience, deals to woo them into stores, and having no tolerance for another season of data privacy invasion, it’s a complex retail landscape that retailers need to master – or risk losing loyal shoppers.”
And therein lies the challenge this holiday season. A new report from Bankrate this morning says that two-thirds of consumers are actually limiting how much they spend each month.
Of those who say they’re curtailing their monthly spending, 32 percent cite “stagnant income” as the main reason, while 29 percent say they need to save more. At a distant third, at 16 percent, is concern about the economy.
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Those most likely to limit their spending are between ages 30 and 49, says the report. “Sustainable growth in household income is the missing ingredient from this economic recovery and the leading culprit for why consumers are holding back on monthly spending,” said Greg McBride, Bankrate’s chief financial analyst, in the report. “Worries about the economy have dissipated somewhat over the past year, while consumers’ desire to forego additional spending to save more has increased.”
Seniors, not surprisingly, are most likely to cite stagnant incomes as their primary reason for holding back on spending.
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