If you think increases in online shopping have signaled the demise of the in-store, in-person retail experience, don’t try making that point to any of the 99 million plus U.S. consumers who are crowding malls and shopping centers this holiday season.
Some holiday consumer spending reports propose a rise in online shopping comes at the expense of the great American storefront. If they are correct, then why are some of the largest, most iconic brick-and-mortar retail chains adding locations? T.J. Maxx, Walmart, Marshalls, and Dick’s Sporting Goods apparently didn’t get the memo – and they are just a few of the retail chains planning new store growth over the next two to three years.
These and other highly successful retailers are learning how to capitalize on online searches and mobile devices without depriving consumers of the opportunity to see and touch products before they buy. This holiday season more retailers are attracting consumers with in-store promotions, and invigorating consumers with the excitement generated by bright lights and eye-popping displays. The biggest brick-and-mortar retailers such as Walmart, Target and Toys “R” Us are looking to stand out with better service, providing incentives to sales employees to deliver the kind of service that turns consumers into customers.
“What we see the leading retailers doing is creating emotional experiences in their stores,” PricewaterhouseCoopers Steven Barr told CBS News. “I like to say that a website can’t give you goose bumps.”
The real story is that consumer spending this holiday season is up substantially from 2015. The National Retail Federation projects an increase of 3.6 percent, the biggest jump since before the Great Recession.
A few of the reasons holiday sales are climbing in 2016:
- A favorable labor market – The Bureau of Labor Statistics (BLS) unemployment rate has shrunk to less than 5 percent, half of what it was just a couple of years ago. The so-called “real” unemployment rate, also surveyed monthly by the BLS, which includes those not receiving unemployment compensation but would take work if offered, is also below levels considered acceptable. In fact, jobs have gone begging; there are more jobs than employers can find qualified people to fill them.
- Cheap gas – As oil and gas supplies increased in 2015, fuel prices declined. The savings are still burning holes in spenders’ pockets.
- Consumers are flush – The savings rate soared to 6 percent in 2016, more than double that of the previous three years. With more money in their savings accounts, Americans feel more comfortable about their futures and less afraid to enjoy the present.
- Consumer confidence – All these factors add up to more confident consumers. According to The Conference Board, consumer confidence has returned to pre-recession levels.
- Big discounts – This holiday season, again, buyers are looking for – and getting – big discounts. “Shoppers want to know that they’re getting some kind of bargain,” offered Suzanne Kapner, a Wall Street Journal reporter, in a December 14 WSJ online interview. She proposed 40 percent off as shoppers’ discount target, deeming promising for outlet stores.
All of this portends a happy holiday season for retailers, the happiest of holiday seasons for a decade with prognosticators now projecting holiday retail sales to reach as high as $670 billion.