The National Retail Federation (NRF) expects U.S. holiday retail sales to rise between 3.6 and 4 percent in November and December 2017. The retail trade association’s annual holiday spending forecast predicts that consumers will collectively purchase $678.75 billion to $682 billion in gifts and other holiday-themed products. Retailers benefiting from the seasonal spike in revenue remain vulnerable to consumer debt, which may require the assistance of a high-performing debt collection agency to recover lost profits.
NRF Mission
As the largest retail trade association worldwide, NRF advances the interests of retailers through “advocacy, communications and education.” NRF represents businesses from small family-owned operations to large-scale department stores. The organization’s annual report serves to provide retail professionals with an accurate portrayal of the current market in order to help guide decision making. An “economic model using several indicators including consumer credit, disposable personal income and previous monthly retail sales” build NRF’s annual forecasts. Totals include the non-store categories of direct-to-consumer, kiosks and online sales.
Factors Affecting Increased Spending
NRF identifies a strong consumer confidence due to a steady economy, job creation, improved wages, increased net worth and tame inflation as a key factor for the anticipated retail sales — excluding automobiles, gasoline and restaurants. Secondly, one additional day between Thanksgiving and Christmas, along with Christmas taking place on a Monday, will provide shoppers 32 days following Thanksgiving and an extra weekend to make purchases.
Historical Holiday Forecast
In 2015, holiday sales hit $633.1 billion for November and December, while sales increased to $655.8 billion in 2016, NRF reports. Growth this season is set to meet or exceed the previous year’s growth of “3.6 percent and the five-year average of 3.5 percent.”
By sector, retailers who raked in the highest holiday profits for 2015 include food and beverage stores at $119 M, electronic and mail-order houses at $97 M, warehouse clubs and superstores at $84 M and building materials and garden equipment at $53 M. Food and beverage stores remained the top earner in 2016 at $123 M, followed by electronic shopping and mail-order houses at $110 M, warehouse clubs and superstores at $86 M; and health and personal care stores at $57 M.
Consumer Spending Habits
The average consumer plans to spend a total of $967.13 this holiday season, up 3.4 percent from the $935.58 consumers prepared to spend in 2016. Additional insights from NRF reveals:
- The majority of consumers, 41 percent, will begin holiday shopping in October or earlier, while 47 percent of millennials will begin in November or later.
- The use of smartphones to research or make purchases will hit 64 percent.
- The top five retail destinations for holiday spending include online at 59 percent, department stores at 57 percent, discount stores at 54 percent, grocery and supermarkets at 46 percent, and clothing and accessories stores at 35 percent.
Consumer Debt Recovery Strategies for Retailers
Holiday sales can prove both profitable and challenging for retail businesses. In 2016, individual consumer debt for retail purchases reached $1,347 for Generation X, $1,166 for baby boomers, $942 for Generation Y, $660 for the Silent Generation (born 1920 – 1940) and $402 for Generation Z, according to a report conducted by Experian. Whether consumers are overspending with a retail credit card or other forms of payment, consumer debt can significantly impact business success.
Businesses conducting in-house debt collections in response to delinquent consumer accounts divert valuable resources away from business-building. Companies that manage to collect on unpaid charges still suffer from loss of time, productivity and manpower. Signing with a top debt collection agency offers businesses efficient accounts receivable management and higher success rates.
Optio Solutions expertly serves the retail industry with a framework of industry knowledge, leading technology, effective data security methods and a strong commitment to compliance. Our clients vary from specialty retailers and department stores to supermarkets and more, providing individualized first– and third-party collections programs to resolve consumer debt. With a consumer-centric approach, Optio assists businesses in maximizing profitability and customer retention. Contact us today to learn more.
