Deloitte Forecasts Up to 4% Increase for 2015 Holiday Sales

gift-444519_1280For obvious reasons, the holiday shopping season has been important to retailers for generations. A time of year when just about everyone is engaged in traditional gift giving generates billions of dollars in revenue for store owners. After seeing holiday sales reach extreme lows during the recessions, many business owners are pleased to see yearly gains in the amount spent during the holiday season. The upcoming holiday season may be even better than expected. Deloitte recently released its holiday retail forecast which expects to see a 3 to 4 percent increase in 2015 holiday sales.

According to Deloitte’s annual retail holiday sales forecast, total holiday sales are expected to climb to between $961 and $965 billion, representing a 3.5 to 4 percent increase in November through January holiday sales (excluding motor vehicles and gasoline) over last year’s shopping season.

“An improving labor market, increasing home values and relief at the pump gave more Americans reason to believe the economic recovery was gaining real traction this year,” said Daniel Bachman, Deloitte’s senior U.S. economist in a press statement. “Those recurring improvements helped buoy sentiment and spending over the past several months. Housing and employment tend to create a more meaningful wealth effect than that of the financial markets, so the recent stock market fluctuations and instability overseas should not have a marked impact on shoppers’ holiday spending intentions. However, while retail holiday sales are expected to rise, the increase may be smaller than last year due to the lingering effects of flat personal income growth in the first quarter.”

As Bachman mentioned, the rate of growth is slower than what was observed last year. According to the report, this growth rate is below 2014’s 5.2 percent gain. In some ways, this is to be expected. Holiday spending took some of the deepest cuts from people’s budgets during the recession, so the high growth is more of a return to the status quo. Situations, where the growth in holiday sales outpaces the growth of the economy in general can’t go on for long. The US GDP Growth Rate for 2014 was 3.66 percent. This year’s rate so far is estimated to be around 3.9 percent. So Deloitte’s holiday sales forecast for this year seems in line with the overall growth of the economy.

The report also included data that shows the importance of using an integrated marketing strategy. As a recent study from Nielsen revealed, ecommerce accounts for only 8 percent of all retail sales. However, the information people receive from digital channels greatly influences where and what people buy things in physical stores.

Deloitte forecasts that digital interactions will influence 64 percent, or $434 billion, of retail store sales this holiday season. With traditional brick-and-mortar retail sales impacted so much by shoppers’ use of digital devices (e.g. desktops, mobile devices, and social media), it makes sense for business owners and marketers to split their marketing budget across several channels. Using PPC ads, social media marketing and content marketing, in conjunction with TV, radio and print ads, greatly increases the overall effectiveness.

And it’s not that there’s no benefit in direct sales from non-physical locations. Though still a small part of overall retail sales, ecommerce is growing quickly. And even direct mail campaigns may see some growth in sales. Deloitte forecasts an 8.5 to 9 percent increase in non-store sales in the online and mail order channels during the 2015 holiday season.

Business owners and marketers need to make sure that online promotions compliment physical store sales, rather than compete with them. For example, “online-only” specials for products that can be found in the retail store may be counterproductive since people prefer to shop in-store.

With the holiday season nearly upon us, business owners and marketers should work quickly to review their marketing strategy. For more data on in-store sales, read this article on Mastercard’s study showing the persistent value of physical stores for retailers.

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