CGP Forecast: Consumer electronics, apparel poised for happy holiday

10/29/2018
Holiday spending will raise 5.1% this year, and some categories will fare better than others.

That’s according to retail research firm Customer Growth Partners’ 18th Annual Holiday Forecast, which predicts that retail spending will reach a record $701 billion, with growth paced by online and consumer electronics.

“Reflecting rising incomes — always the key driver of consumer spending — the retail sector gained speed as the year unfolded, now doubling its 2.5% growth pace from this past winter,” said Craig Johnson, president, CGP. “Holiday may fall just shy of 2017’s stellar 5.3% growth rate, but 5.1% is a very healthy pace, well above the mid-4% consensus. Most importantly, since this robust growth is based on sound fundamentals like full-time job growth and rising real incomes — it is far more likely to be sustainable well into the new year and beyond.”

Holiday will again be paced by online retailers, up 9.9% but down from 2017’s 11.4% pace. Among merchandise categories, consumer electronics will grow 6.1%, riding the new product excitement, whether from new iPhone lines, Samsung’s new Galaxy Note 9, or Sony’s new audio gear, Johnson said.

Apparel sales are poised to rise 5.4%, the best growth since the post-recession bounce in 2011. Health and personal care will see an increase of 3.8%. The sports/toys/books sector will decline sharply — almost 6.5% — from last year — with some of the sales picked up by Amazon, Target and Walmart.

Clubs and superstores will shine this holiday season, enjoying the best in-store and online traffic growth they have seen in years, with a sales increase of almost 5.2%.

Department stores’ sales will be down almost 2%, largely due to Sears’ closures, according to CGP.

Johnson noted there are clear risks to CGP’s forecast, including rising gasoline prices and increasing global tensions. Still, he said, the key takeaway is that consumers and retailers alike will have a happy holiday.

“And since the spending growth is built on a platform of job growth and wage gains, prospects for sustained growth into the future are improving with each passing month,” Johnson added.
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