Holiday sales won't prevent 2020 closures and bankruptcies

2019/11/28 Innoverview Read

Dive Brief:

  • Retailers are in for "solid" but not "standout" holiday season, according to a recent FTI Consulting report. The firm predicts that retailers will have a 5.2% increase in discretionary 2019 holiday sales.

  • The firm predicted that 2020 will bring another round of unusually high numbers of store closures and bankruptcies despite a steady holiday season.

  • Future sales growth is mostly taking place via online sales, according to FTI. It estimates that the shift from brick-and-mortar sales to online sales is about half of the retail sector's total sales growth.

Dive Insight:

FTI's holiday report offers some context for how the U.S. economic outlook affects the holidays. Wage growth has leveled off at about 3%, the unemployment rate remains low and inflation seems under control, but shocks to the stock market last year brought back anxiety in the aftermath of the Great Recession, the report authors note, adding that consumer sentiment is cautiously optimistic. 

Consumers' cautious optimism is not a surprise given their behavior patterns. Shoppers are watching America's trade relations to assess their impact on the cost of goods but are opting to spend more this holiday season and are open to indebting themselves further, per reports.  

Though there are signs that in-store shopping still attracts consumers, previous reports echo FTI's findings that more shopping is migrating online. Research from Shopkick indicated that Gen Z is likely to conduct their holiday shopping in-store, but a PwC report found that more than half of consumers will shop for their holiday purchases online. Plus, another report from Episerver found that almost half of consumers plan to buy their holiday goods via Amazon.

(Source: Retail Dive