Rich shoppers seen boosting U.S. holidays, deep discounts likely
Wealthier U.S. shoppers are likely to drive the most bountiful holiday season in three years as retailers slash prices to cope with tighter budgets, analysts said on Tuesday, as a new survey showed 2014 retail sales rising 4.1 percent.
The National Retail Federation predicted retail sales would climb to $616.9 billion, outpacing last year's 3.1 percent growth. Sales rose more than 5 percent in 2010 and 2011, and 3.5 percent in 2012, and growth averaged 2.9 percent over the past decade, NRF said.
The group's forecast is one of the closely watched benchmarks ahead of the holiday season, which can account for 20 to 40 percent of annual sales for many retailers.
"While expectations for sales growth are upbeat, it goes without saying there still remains some uneasiness and anxiety among consumers when it comes to their purchase decisions," NRF President and Chief Executive Matthew Shay said.
Online sales are still growing rapidly as shoppers seek deals, convenience, and are pressed for time, especially during the holiday crunch, market studies show.
About 41 percent of shoppers will increase their online spending in 2014, PwC said on Tuesday. But 72 percent of households expect to spend $684 this holiday season, down from $735 in 2013, it added.
NRF's Shop.org division forecast an 8 to 11 percent growth in online holiday sales to as much as $105 billion. Year-ago figures were not immediately available.
The holiday season is a major U.S. economic growth marker, as consumer spending accounts for about 70 percent of Gross Domestic Product.
SURVIVALISTS VS SELECTIONISTS
PwC split consumers into those who earn more than $50,000 a year, and those who make less.
"The spending divide among shoppers is widening, creating two distinct groups that we are tracking - survivalists and selectionists - and retailers must cater to both segments," said Steven Barr, leader, retail and consumer practice, at PwC.
Specialty stores are likely to fare better than convenience and discount stores and supermarket operators, noted Marcie Merriman, executive director of retail strategy and customer engagement at EY.
"We are likely to see continuing growth for retailers catering to upper-income consumers but at the same time the everyday consumer, the low-income shopper is not feeling a lot of relief and there is a good chance that will get reflected in holiday sales," Merriman said.
The NRF's forecast is in line with that of Deloitte, which on Sept. 24 forecast sales rising by a range of 4 percent to 4.5 percent for November-to-January, versus 2.8 percent growth a year earlier.
AlixPartners is less optimistic, projecting gains of 3.2 percent to 3.8 percent in 2014.