Thanksgiving meals haven’t even been eaten yet—let alone prepared—yet retailers around the country are already bracing for what they hope is a wave of shoppers on Black Friday.
But with the rise of holiday-shopping off-shoots like Cyber Monday and a series of retailer bankruptcies this year, how will brick-and-mortar retailersfare?
The indication, so far at least, is that holiday shoppers will still do some major damage this year. The National Retail Federationanticipates that retail sales in November and December will increase between 4.3 percent and 4.8 percent year-over-year, bringing in between $717.45 billion and $720.89 billion. On average, the annual increase over the past five years has been 3.9 percent, according to the industry group.
In 2017 holiday season retail sales came in 5.5 percent higher than the year before, the strongest increase since 2005.
One benefit retailers are counting on is that consumer confidence remains high. The Conference Board in October reported that its index went up to 137.9 from 135.3 in September—remaining at levels last seen in 2000.
NREI chatted with Anjee Solanki, national director for U.S. retail services with Colliers International, about her predictions for the 2018 holiday shopping season, the importance of click-and-collect strategies for retailers and why Black Friday deals feelincreasingly like the norm.
This interview has been edited and condensed.
NREI: Could you discuss where consumer sentiment is now as we head into the biggest shopping event of the year?
Anjee Solanki:I definitely think it’s still quite positive. Consumer confidence is still relatively good and high compared to prior years. We’re definitely seeing that there is a slight increase when you compare the year-over-year growth in retail [sales] since 2012. If you really think why this is occurring, in my opinion I believe it really has to do with the strength of omni-channel in terms of providing the convenience for the shopper to either shop online or off-line. Retailers are becoming a lot more sophisticated in strengthening the omni-channel experience to that customer.They’ve had, let’s call it the last seven to 10 years, to really figure it out for their own brand, strategize, create some tactics around it, hire people who really understand that side of the business and invest capital to strengthen the omni-channel component. Because we’re seeing that growth, we’re seeing growth in retail sales, because, again, we’re making it very easy for the consumer to shop on multiple platforms.
NREI: Could you talk about the omni-channel component a little bit more? Obviously, that’s a word that’s been around for a while now; it’s something that retailers pretty much know they have to do, have an omni-channel strategy. How has this evolved today? What are some of the latest advances that you’re seeing?
Anjee Solanki:I would say, for example, the whole click-and-collect movement: It’s been around, however, I think we’re seeing more click-and-collect opportunities. We’re also seeing retailers change their store footprint to accommodate more collection in stores. … And if you stop and ask, well why is that so important today and is it working? And I think there needs to be some more data input or data collection for that. But the key really is it’s all about customer convenience. …
Another reason why there’s more push with click-and-collect is for a retailer [is] it actually saves them a little bit of money. And what I mean by that is that if you order online, pick up in store, and the collection area where you collect the item has a person standing there already, that person can quickly open the box, or pick up the product, and it does not have to completely [be] boxed in a shipping box with all of the additional protections.So you can really see the product and go, “Oh, you know what? I thought that red was—when I saw it online—was going to be more of a tomato red versus an orange-red. I’m not interested.” They can immediately just hand it back and get a full refund. Now it’s saving costs for that retailer from having that person ship it back, that person having to put everything in a box, label it, print out the label—even if it’s being picked up from their home. But it just saves everybody one extra step. I think retailers are really looking at that as another way to save on costs as well.
NREI: There are some segments within retail that are growing, but this will be the first holiday season without Toys ‘R’ Us, and then Sears filed for bankruptcy. Does that cast a shadow over the holidays this year for the retail industry?
Anjee Solanki:There’s been so much chatter in the industry regarding Sears and Toys ‘R’ Us and other more mature brands that opened so many more locations, didn’t really re-invest in their concept as it relates to omni-channel, etc. I think that over the last five-plus years we’ve been talking about this, so I don’t think there are any issues. What we really now are seeing is that that noise is starting to go away. We know it’s there and it exists, but it’s not impacting the retail industry, both from a landlord perspective and from a retailer perspective, or consumer. From a landlord perspective, they’re saying,“Great, we want your box back because we can basically repurpose it, not just for retail but for non-traditional retail, whether it’s a health club, whether it’s medical, whether it’s for multifamily.” So, they’re being completely repurposed, these Sears boxes. I can tell you in Northern California, Restoration Hardware took an old Sears box, converted it into an outlet and a mini distribution center. So, the answer is definitely not. And Amazon, as fierce as they are, they’re doing a phenomenal job seeing that there’s a segment void and coming into tenantry. We’re also seeing a rise, which I love, of the more local small retailers that are stepping into that segment again and winning back that business.
NREI: What’s your overall prediction for holiday sales this year? Do you think they’re going to surpass what we saw last year or maybe in the previous couple of years?
Anjee Solanki: Definitely. I think we’re going to see an increase compared to since maybe 2012, and I’d say the increase will be anywhere from 3 percent to 4 percent compared to last year.
NREI:And is that just based off the continued high level of consumer confidence or is there anything else underpinning that prediction?
Anjee Solanki: I think it’s reallyomni-channel and consumer confidence. Even though interest rates are going to jump a little bit, there’s still this … kind of human nature reaction that you’re seeing all these great sales like “Get this deal now!” Whether it’s Amazon or it’s the preferred retailers you like to shop—they’re creating this excitement of,“If you don’t get this deal now it’s going to disappear!” Which if you’re savvy enough you’re going to say, whatever. But it feels to me likeBlack Friday is no longer relevant. I feel like Black Friday is every day of the year now. But [retailers] have created this anxiety of, “If you don’t order it now it may not be there.” … They’re pretty much giving you whatever you ask for as a customer.