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Happy Holidays for the Retailers?

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If you were out shopping this past Black Friday weekend, you probably noticed that the stores were packed.

The holiday shopping season, traditionally considered to be between Thanksgiving and Christmas, is a key time for retailers because they can generate up to 40 percent of annual sales.

How will retailers fare this season?
My prediction is that holiday sales should be up 4 percent, but it will be harder to generate those sales than last year.
This year there are four weekends to shop between Thanksgiving and Christmas compared with five weekends in 2012. And there are six fewer shopping days this year.

Presumably more weekends – and more days – in a holiday season give shoppers more opportunities to hunt down additional perfect gifts.

To help this year, a number of national chains opened on Thanksgiving evening for the first time.

The National Retail Federation predicts holiday sales will increase about 3.9 percent this year compared with the 2012 holiday season.

Based on a survey of 500 consumers, consulting firm Accenture found that shoppers intend to spend 11 percent more this year than during last year’s holiday season.

Of course, intentions do not always translate into actions.

A rule of thumb for predicting the outlook for holiday spending is to look at the back-to-school spending during the same year.
For instance, the back-to-school spending in 2012 increased 4.5 percent while holiday spending rose 4.3 percent. The retail spending figures excludes food and auto sales in August and September for back to school results and November and December for holiday sales.

The relationship between back-to-school and holiday sales is not perfect, and sometimes back-to-school sales are a bit higher than holiday sales (as what happened in 2012 and 2011) or a bit lower (as in 2010).

But back-to-school spending generally is a reliable gauge of holiday spending.

This year’s back-to-school sales rose 3.1 percent compared with 2012, which seems to support the retail group’s estimate of 3.9 percent sales growth this year.

Another predictor of holiday sales is seasonal hiring by retailers — an increase in hiring provides a gauge of how much additional business retailers anticipate during the holiday season.

Retailers created 159,500 seasonal jobs in October, a 6.8 percent increase from October 2012, according the most recent jobs report by the Bureau of Labor Statistics. This increase in seasonal hiring also generally supports the retail group’s holiday sales forecast this year.

In Virginia, sales figures are a bit more mixed and harder to interpret, primarily because retail sales data, excluding food and auto sales, are unavailable at the state level, so the definition of back-to-school spending reflects total retail sales.

In addition, the relationship is not as close as it is on the national level, but over the past decade holiday sales have increased or decreased in sync with back-to-school sales.

Across Virginia, back-to-school spending fell 1.2 percent in 2013 compared to 2012.

In the Richmond area, spending fell 3.1 percent. This suggests Richmond could fare worse than the state during the holiday season.

These figures do not take into account the government shutdown in October, which did not have much impact on the Richmond area.

It may actually help sales in Northern Virginia and Hampton Roads where many federal workers live because the affected workers will have received their paychecks for the period when the government was shut down.

When historical data don’t give a clear answer, there is always anecdotal evidence.

Aside from the fact that malls were packed, did you see shoppers carrying bags or were they empty-handed?

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