Holiday sales to top $1 trillion for first time ever, here’s why

By RetailFOXBusiness

Retail stocks may receive major boost from holiday sales

S&P equity chief investment officer Erin Gibbs and Fairfax Global CEO Paul Dietrich on why they expect holiday sales to boost retail stocks.

Americans plan to spend big this holiday season, according to one research group.

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New data released this week predicts total holiday retail sales will top $1 trillion this year for the first time ever, showing its strongest growth since 2011.

The most ironic part for some, according to eMarketer’s projections, is that the 5.8 percent boost this year will specifically come from brick-and-mortar retailers as the “doom-and-gloom narrative” continues to play out in the media.

“While e-commerce will continue to see strong double-digit gains, brick-and-mortar retail should be a particular bright spot this holiday season,” Andrew Lipsman, principal analyst at eMarketer said, while noting that not everyone stands to benefit from the windfall.

“Several [stores] have shut their doors this year, but others are really capitalizing on the strong consumer economy. Retailers are luring in shoppers with remodeled stores, streamlined checkout and options to buy online, pick up in-store,” he added.

Brick-and-mortar sales for the 2018 holiday season are expected to jump 4.4 percent to $878.38 billion (higher than the $863 billion projected in Q3), the group said. Additionally, the stores will represent the majority of traffic at 87.7 percent, even though its share has steadily declined over the years.

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Lipsman said the spike is being fueled by a mixture of low unemployment, strong income growth and high consumer confidence.

Cindy Liu, another forecasting analyst for the group, adds that the competition between stores and online retailers like Amazon will still be fierce this year and will most likely spark more promotions and perks, like free and fast shipping.

E-commerce sales this holiday season are expected to increase 16.6 percent to $123.73 billion, which will represent 12.3 percent of all holiday retail sales this year, a figure that has been growing steadily.

The figures coincide with recent statistics from the International Council of Shopping Centers (ICSC) last month that predicted consumers plan to spend 4.5 percent more than last year.

“What our survey found is 54 percent of shoppers plan to spend more this year than last year, with 28 percent stating a change in job status or income as a factor in their increased spending, demonstrating the impact the economy is playing this holiday season,” Stephanie Cegielski, retail expert and spokeswoman of ICSC told FOX Business, adding that the industry is currently in the midst of a retail renaissance.