« Prev2016 Employment Projections by Educational Requirements

Economic Impact: Holiday retail sales should be stronger this season

The holiday selling season got off to a strong start on Black Friday, but the results were mixed when comparing online versus in-store sales.

Online spending for Black Friday, the traditional start of the holiday selling season, was up 16.9 percent compared with the same day in 2016, according to Adobe Digital Insights, which tracks online spending in the nation’s 100 largest retail websites.

On the other hand, data from research firm ShopperTrak shows Thanksgiving Day and Black Friday foot traffic at brick-and-mortar stores fell when compared to the same days in 2016. Shopper traffic at stores just on Black Friday has essentially been unchanged for the past two years, but flat foot traffic doesn’t necessarily translate into flat revenue.

So how will overall holiday sales fare during this time of year that represents about 20 percent of the retail industry’s total sales?

One method for predicting holiday spending is comparing back-to-school spending during the same year.

For instance, back-to-school spending in August 2012 increased 2.9 percent, while holiday spending — defined as sales in November and December of the same year — also rose 3.1 percent. The retail spending figures exclude food and auto sales.

The relationship between back-to-school and holiday sales is not perfect, and sometimes back-to-school sales are a bit higher than holiday sales (as what happened in 2011, 2013 and 2014) or a bit lower (as in 2015 and 2016). But back-to-school spending generally is a reliable gauge of holiday spending.

This year’s August back-to-school sales rose 4.3 percent over 2016 sales, suggesting strong growth in holiday sales this November and December. And that’s great news for retailers.

Recent announcements by some national retailers and online sellers to hire more seasonal workers than last year supports an optimistic outlook for the holiday selling season.

Results from Cyber Monday also point to a good year. According to Adobe Analytics, Cyber Monday was the biggest U.S. online shopping day ever, with a record $6.59 billion spent, up 17 percent from last year.

The National Retail Federation predicts an increase in holiday sales of between 3.6 and 4 percent, including online business, to $678.8 billion, compared with $655.8 billion in 2016.

Global financial services firm Deloitte is more optimistic, looking for this year’s holiday sales to rise between 4 and 4.5 percent from November through January compared with the same period a year ago.

Economic reports also point to higher sales this year. Employment in the nation is picking up, and the jobless rate is declining.

Personal income is up 3.4 percent for the 12 months that ended in October, or by $539 billion. American consumers like to spend, so much of that increase in income will translate into purchases.

Based on the most recent economic figures, retailers in Virginia and the Richmond region also should do well. Nonfarm employment grew 0.9 percent in Virginia during October compared with a year ago. During the same period, employment increased 1.3 percent in Richmond and 1.5 percent in the nation.

Virginia’s seasonally adjusted unemployment rate remains below that of the nation and at 3.6 percent in October. It is at its lowest point since March 2008. The U.S. rate stood at 4.1 percent in October.

For the Richmond region, the seasonally adjusted jobless rate rose slightly from 3.7 percent in July to 3.8 percent in October.

The latest retail sales figures reflect some strength as well in Virginia and the Richmond area.

A seasonally adjusted six-month moving average of retail sales in Virginia shows 3.1 percent growth from a year ago in September.

The Richmond area has seen an average retail sales increase of 5.6 percent over the same period.

With the potential for federal tax cuts and a more optimistic outlook for national growth, a 3.5 to 4 percent growth in retail sales in Virginia and around 6 percent growth in the Richmond region this holiday selling season compared with last year is possible. But, then again, sales in Virginia will suffer if a federal government shutdown occurs in December.

« Prev2016 Employment Projections by Educational Requirements