There are anticipated to be some rays of sunshine this holiday coming mostly from omnichannel shoppers, while clouds will continue to hover over some parts of retail. The forecast assumes the full boat of tariffs will go into effect in December, rattling investor and shopper confidence late in the season.

According to the forecast, top-line growth in the fourth-quarter holiday will improve to 3.8%, up from a relatively moderate 3.1% in the year-ago period. The easy comparison, especially relative to last December, will contribute to the improvement, while macro headwinds will hold growth to a below-average pace.

 

In 2018, shoppers aggressively spent their tax cuts throughout the year, but then ran out of items on their Wishlist by the time December arrived. Additionally, the bankruptcy and subsequent liquidation of Toys “R” US before the holiday pulled shopper demand forward and left some late-season holiday toy demand abandoned. This will be easy for most channels to go up against, leading to better growth than last year.

There are some tangible effects retailers can rely on to stimulate sales this holiday—lower gasoline prices and improved job opportunities for younger, low-income shoppers. This will support better performance among the mass/value channels compared to most brick-and-mortar channels. Consumables category spending, not just traditional holiday categories, are expected to benefit from these trends as well.

Pulling growth below its historical average will be the lukewarm stock and housing market—two big drivers of luxury and big-ticket spending. Concerns about tariffs and a recession in 2020 will keep the stock market from rallying despite lower interest rates.

There are also pockets of weakness in the job market that will hit the Midwest hardest— a retreating manufacturing sector, which will only deteriorate more with recently announced tariffs, and a slumping agriculture sector.

But the true differentiator this holiday between leading and lagging retailers and channels will be online. Online sales will post 14% growth and capture 18% of all sales in the holiday fourth quarter.

And it’s not just online orders that will give the top-performing omnichannel retailers a leg up over the competition this holiday—recent results from Walmart and Target indicate their omnichannel platforms are stimulating in-store purchases as well. All the while, Amazon is likely to remain the most shopped retailer this holiday. As shoppers engage with these retailers through different types of order fulfillment and shopping, this will leave some other retailers outside of holiday shoppers’ consideration set.

The competitive pressures from omnichannel are evident in the forecast for the combined brick-and-mortar department stores and specialty channel which portends only meager growth.

Kantar’s KRiQ clients can download two dozen U.S. channel forecasts and access these insights in summary slide format in the Macro Data and Macroeconomics Insight Center section. Customized holiday webinars and publications leveraging Kantar’s macro, shopper, and retail experts are also available. You can catch a preview of our holiday webinar here.

Doug Hermanson
doug.hermanson@kantar.com

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