The last few weeks of the year are always critical for retailers here and across the United States. That’s especially true this year. A rebounding economy suggests that holiday sales will be better this year than in the last few, but lingering unemployment and consumer worries remain a cause for concern. Given that, it is hardly surprising that merchants – large and small, traditional and not – are paying close attention to their bottom line as Christmas Day nears.
Such concern is understandable. Many retailers depend on year-end holiday sales for a large part of their earnings. Some, in fact, earn as much as 30 percent of their annual profit in the last couple of months of the year. Anything that can derail sales during that period – weather, worries about the economy, etc. – is automatically a concern.
Early holiday sales figures this year should ease some of those worries. Last week, the National Retail Federation boosted its holiday season sales forecast to a 3.3 percent increase over last year. The original forecast was for a 2.3 percent gain. The International Council of Shopping Centers and the U.S. Department of Commerce also revised holiday sales forecasts upward. Clearly, many indicators suggest a better sales year than last and perhaps the best since 2005.
Reports from the retail front line seem to support the more optimistic forecasts. Merchants, for the most part, say steady traffic and brisk sales are the norm so far this shopping season. Even so, they’re taking no chances. They continue to work hard to entice shoppers with sales, deals and extended store hours. No wonder. One survey indicated that more than 15 percent of people who planned to do holiday shopping this year had not started shopping by the second week of December.
Those last-minute shoppers and other procrastinators who have done some but not all of their shopping might hold the key to a robust sales year for merchants. One consultant says that up to 70 percent of a retailer’s sales in December can come in the last few shopping days before Christmas. Much, then, rides on who shops and how much they spend this week.
This year more than most, the profits of retailers along with the continued improvement in the nation’s economy, depend on the ability of shoppers to spend, if not lavishly, then at higher levels than in the last few years. Reports here and elsewhere suggest that is the case.
Consumers – buoyed by generally upbeat reports of key economic indicators, including the prospect of an improving job market – are doing their part. They’ve demonstrated a willingness to spend more freely on gifts for family and friends than in recent years. The shopping season, though, is not over.
The answer to the retail community’s continued worries about sales and profits depends in large part on whether the momentum of what has so far proved to be a positive sales season continues apace for the next few days.