Weather Appears to Favor Retailers for Holidays
If cold and snow keep customers away from retailers, this year the weather should favor them. The National Weather Service’s forecast for November and December calls for mild to normal conditions. That means the burden on the brick-and-mortar retailers is whether inventory and discounts can draw consumers out. Of course, whether weather is good or bad, e-commerce revenue is expected to rocket to record levels.
The West Coast and cities from Boston down to Washington, D.C., are expected to have normal or slightly above normal temperatures. Texas temperatures should be below normal, but it is far enough south that the forecast does not mean freezing weather and snow conditions. Areas that are less populated, from Arizona to Tennessee, cannot be predicted by the National Weather Service. However, inclement weather through those states will not cripple the turn out in the more populated areas.
The forecast should help support sales forecasts from the National Retail Federation (NRF), which call for modest improvement over 2014:
The National Retail Federation announced today (October 8) it expects sales in November and December (excluding autos, gas and restaurant sales) to increase a solid 3.7 percent to $630.5 billion — significantly higher than the 10-year average of 2.5 percent. Holiday sales in 2015 are expected to represent approximately 19 percent of the retail industry’s annual sales of $3.2 trillion. Additionally, NRF is forecasting online sales to increase between 6 and 8 percent to as much as $105 billion.
Worry that slow wage growth and slowing improvement in unemployment rates would hurt growth are overblown, if the NRF is correct.
Harsh weather favors online retailers, and even with good weather the sector will do well. The NRF management wrote on October 20:
Average spending per person reaches $805.65, comparable with spending in 2014 holiday season ($802.45).
Spending on gifts for family members will total $462.95, up from $458.75 last year, and a survey high.
Almost half of holiday shopping, consisting of browsing and buying, will be done online: average consumers say 46 percent of their shopping (both browsing and buying) this holiday season will be conducted online, up from 44 percent last year.
21.4 percent of smartphone owners will use their device to purchase holiday merchandise this year, the highest seen since NRF first asked in 2011. Nearly half (46.7%) said free shipping/shipping promotions are important factors in their decision on where to shop.
55.8 percent of holiday shoppers will splurge on themselves and/or others for non-gift items, and will spend an average of $131.59, up from $126.37 last year.
Weather should help brick-and-mortar retailers, but not very much.