With news headlines shouting doom and gloom in every direction, is the National Retail Federation’s record-breaking $1 trillion holiday forecast wishful thinking? Or something more nuanced?
“The consumer is sentimentally weak, but fundamentally sound,” explained Mark Mathews, chief economist and executive director of research for the NRF in a special podcast episode for Retail Rx with Ian Fredericks, chief executive officer of Hilco Global Capital Solutions and executive director of Hilco’s Consumer and Retail platform. That’s important because the consumer is powering our economy more than ever before. Today, 68 percent of GDP is driven by consumer spending—the largest percentage in the past 15 years.
“While lower-income households are definitely struggling, what we have seen over the course of the year is that all households have protected their spending on loved ones,” said Mathews. “Mother's Day, Father's Day, Valentine's Day, Back to School, Halloween… we've had at or near record levels of spend across all of those events.”
Essentially, it’s the nature of spending that has changed, and to safeguard that spending, many have pulled back in other areas like recreation or travel. Consumers have also shifted to more promotional spending that squeeze margins.
“The retailer is constrained because prices are rising, so while retailers will offer sales that are important to consumers, we may not see the breadth of sales that we’ve seen before,” Mathews said.
The NRF has been analyzing data and advising retailers for over a century. The November/December season represents roughly 20 percent of the year’s retail sales for many retailers.
Learn more about your ad choices. Visit megaphone.fm/adchoices
Show more...