Hope for the Holidays

A lthough the holiday season is traditionally seen as a time of celebration, joy and thanksgiving, it is also the most crucial time of year for the retail industry. Some retailers see between 25 and 40 percent of annual sales occur over two months — a period that can determine whether the year was a success or disappointment.

In the annual holiday forecast we released last month, NRF is projecting November and December sales to rise a combined 2.8 percent to $466 billion — slightly higher than the 10-year average of 2.6 percent, but just over half the 5.2 percent growth our industry experienced last year.

According to an NRF survey conducted by BIGresearch, holiday shoppers plan to spend an average of $704 on gifts and seasonal merchandise, slightly less than last year. They’re also planning to spend about $130 to take advantage of holiday sales and make additional, non-gift purchases — the highest amount in the survey’s history.

Ultimately, growth this holiday season is expected to be average — and given all of the economic factors at play, that’s not necessarily negative. The pace of the economic recovery has been patience-straining at times, but we are continuing to see growth; in fact, retail sales have increased for 15 consecutive months.

As always, retailers continue to make adjustments. Businesses are being strategic with their supply chains, keeping inventory levels lean and filling their stores with discounts and promotions. Unlike in 2008, when the financial crisis caught everyone off-guard, retailers have a strong understanding of the consumer mindset this holiday season.

Shoppers have adjusted, too. Many families have paid down debt and increased their savings, leading to larger holiday-earmarked nest eggs. Consumers are still operating with great caution, however, focusing on finding the best deals and maintaining their budgets. This year, mobile will play an even greater role: Half of smartphone owners plan to use the devices to shop for holiday merchandise, and 70 percent of tablet owners are expected to do the same.

All of this means that retail will continue to be a key sector powering our nation’s economic recovery. In addition to the 15 months of consecutive retail sales growth and the 100,000 jobs our industry has added since August 2010, NRF forecasts that retailers will hire between 480,000 and 500,000 seasonal workers in the coming months. Macy’s has said that it will hire 78,000 holiday workers, and Toys “R” Us estimates adding 40,000 temporary jobs.

For an industry that supports 42 million jobs and $2.5 trillion in annual GDP, the news of predicted growth for the upcoming holiday season should be seen as an early present to consumers, businesses and the U.S. economy as a whole.