Santa’s (and Retailers’) Helpers this Holiday Season

In a recent Weekly Research Briefing, I discussed holiday shopping’s positive start—particularly if you had an online presence. While Santa’s helpers get busy packing his sleigh, stats are supporting that claim as, according to a National Retail Foundation survey, 59% of consumers planned to shop online accounting for an estimated 51% of total holiday retail sales—resulting in record-highs of $5 billion in online sales on Black Friday alone.

However, recent retail outperformances and revised higher estimates, came as a big holiday surprise. According to a study by Goldman Sachs, retail store traffic, a sign of retailer health, measured improvements in November from the 3Q run rate (see Exhibit 1) compared to the prior years’ downward trends—leaving a number of retailers noting jolly 3Q earnings.

(Goldman Sachs)

Retailers are benefiting this holiday season as consumers are eager to spend. The results from our recent Twitter poll, which reported that 46% are spending more this holiday season, is supported by year-over-year retail growth rising 5.8%—the highest levels since March 2012. The recent pop in retail (see the chart below), along with an increase in consumer spending, tells me all signs point to a strong U.S. economy.

The historically low 4.1% unemployment rate, along with continued stock market highs, have helped Americans’ confidence as they become more generous with their wallets this holiday season. The Wall Street Journal recently published an article noting American’s spending is outpacing both inflation and wage growth; suggesting more spending and less saving—resulting in expectations that 2017 will make the strongest holiday season since 2014.

Amidst the holiday rally, retail stores still have a bumpy road ahead. The pre-recession expansion of brick-and-mortar stores has many retailers in a crunch today as online becomes a necessary ingredient to the successful retail recipe. As the U.S. economy shifts, and the retail landscape continues to evolve, it will be interesting to see which retailers become traffic stops versus roadkill on Amazon’s highway.

Read more from Blaine Rollins in his latest Weekly Research Briefing >