Happy Holidays to the Grocery Industry
Food retailers are predicted to be in for a holly jolly Christmas this year.
According to Deloitte’s annual forecast, holiday retail sales for 2019 will increase 4.5% to 5%, exceeding $1.1 trillion. That would be better than last year’s 3.1% growth on sales of $1.09 trillion from November to January.
Deloitte also forecasts that ecommerce sales will grow by 14% to 18%, year-over-year, during the 2019–20 holiday season, compared with sales growth of 11.2% in 2018. The robust growth will likely result in ecommerce holiday sales reaching between $144 billion and $149 billion this season.
“The projected holiday season growth is, in part, due to the current health of the labor market. Near record-low unemployment rates, coupled with continued monthly job creation, may encourage people to spend more during the holiday season,” said Daniel Bachman, Deloitte’s U.S. economic forecaster. “The economy is still growing, albeit at a slower rate. Additionally, we continue to see consumer confidence elevated, which also helps boost holiday spending.”
According to the National Retail Federation (NRF), shoppers usually spend in three main categories during the holidays: gifts (hard goods), food, and other non-gift items such as flowers and gift cards. Further, the grocery channel is a popular destination for holiday shoppers: 55% shop department stores, 51% go to discount stores, 44% to grocery stores, 33% to clothing stores, and the rest to electronics stores, according to Washington, D.C.-based NRF.
Bachman noted that the 2019 holiday season increase reflects expectations for consistent growth throughout the season. However, because last year’s holiday sales came in lower than expected in December, the 2019 forecast predicts a strong growth rate in comparison with 2018’s more modest growth. Last December, the government shutdown, an uptick in consumer savings, and a sharp stock market decline may have led to the lower-growth season.
“Based on a growth in consumer disposable income and spending indicators, retailers, across channels, should expect a strong holiday season in 2019,” said Rod Sides, vice chairman at New York-based Deloitte LLP, and U.S. retail and distribution sector leader. “We’ve seen retailers continue to improve customer experience, invest in the fundamentals, and leverage relationships with innovative startups to boost engagement and efficiency. But convenience is the new retail currency; retailers who offer seamless experiences, have products available, and can deliver items more quickly than ever are most likely to win this holiday season.”
Meanwhile, Target and Walmart have been bullish on the 2019 holiday season, with both retailers increasing their full-year earnings outlooks.