This year’s expected winners and losers in the retail arena align with industry and economic trends affecting the sector, including consumers’ growing preference for off-price shopping, the rise of mobile commerce, and a strong dollar.
US consumers also appear to be in relatively good shape due to gains in employment and income, and low gas prices. Indeed, 75% of shoppers say they plan to spend more this holiday season than they did last year, according to a survey conducted by consultancy Deloitte.
Here’s a sampling of leading US retailers — physical and virtual — and their prospects for the holiday season.
Buoyed by strong year-to-date sales growth, discount retailers TJX (parent of T.J. Maxx, Marshalls, and HomeGoods) and Ross Stores appear poised for a jolly holiday. Consumers continue to flock to off-price retailers for housewares and apparel at the expense of department stores. Indeed, sluggish traffic and bloated inventories at Macy’s and Nordstrom sparked a sell-off in retail stocks recently after the chains reported disappointing earnings and warned of lackluster holiday sales.
Best Buy last week also forecast a revenue decline for the crucial fourth quarter and reported lower-than-expected quarterly same-store sales. The consumer electronics giant cited slowing consumer demand for mobile phones and tablets — big sellers in holidays past.
Meanwhile, online powerhouse Amazon.com is expecting another record-breaking holiday selling season driven by strong growth in mobile commerce. Last year, total holiday sales from the Amazon Mobile Shopping App doubled in the US, and Black Friday had the most rapid growth in mobile shopping. With the number of online purchases made via a mobile device expected to grow 30% in the fourth quarter, Amazon is likely to be a big winner. The retailer began offering holiday deals on November 20.
In a direct challenge to Amazon, Wal-Mart is decking its aisles and calling in the big guy: Santa. In a move borrowed from department stores’ playbook, the company is hiring hundreds of Santas, decorating its stores, and playing carols in an attempt to turn a soulless hunt for bargains into holiday fun. Wal-Mart’s focus on improving the in-store experience reflects the fact that physical stores must up their game to attract defectors to online or other retailers. The company surprised last week when it reported better-than-expected third-quarter earnings.
Tiffany & Co. is the latest retailer to signal caution ahead for the holiday shopping season. In forecasting disappointing earnings for the year, the luxury jeweler cited uncertain economic conditions and the strong dollar’s adverse effect on tourism. The company generates nearly 25% of its US sales from foreign visitors to the US, who flock to its flagship store on Manhattan’s Fifth Avenue.
Alexandra Biesada shops every day, whether she wants to or not, and pines for the days when it was strictly a recreational activity. She has covered the retail beat for Hoover’s since 2001. Follow her on Twitter.