CHICAGO: There are several encouraging signs pointing to a positive winter retail season in the US, but overall retail sales in November and December are forecast to grow by just 1.3% year-on-year, according to a new report.
Mintel, the global marketing intelligence agency, said it expected US winter retail sales to reach $692bn this year, but that equates to the slowest rate of growth the retail industry has seen since 2006.
"While retail sales are projected to increase, we're seeing a significant slowdown compared to years past, driven, in part, by consumer concerns surrounding the 2016 US presidential election and global economic concerns," explained Diana Smith, Mintel's Associate Director of Retail and Apparel.
She said Mintel remained optimistic about the forthcoming holiday season, but described the outlook as "conservative" despite signs that some consumers, especially millennials, plan to spend more this year.
According to the research, about two-thirds (64%) of millennials say they intend to spend more this holiday season compared to last year, although this drops to just 20% of Baby Boomers.
Millennials are also the consumers who will drive online sales this year, with 88% planning to complete half of their shopping online and more than a third (37%) looking to accomplish all of their holiday gift shopping online.
Overall, about three-quarters (74%) of consumers plan to go online for at least half of their shopping this year, compared to 69% in 2015.
"The convenience of online and mobile shopping has forever changed how consumers tackle their holiday wish lists, especially among millennial shoppers," said Smith.
The report also found that the winter holiday season is no longer confined to just November and December, which continues a trend seen in previous years.
Mintel said nearly half (46%) of consumers prefer to start their holiday shopping before Thanksgiving and a majority (53%) go shopping for gifts all year. Furthermore, 46% say that they feel like they're always making a lot of last minute purchases.
"Given that consumers are shopping earlier and throughout the year, preparing a detailed scheduling approach with messaging strategies that consider both planner and last-minute shoppers is critical for retailers, as considering when offers occur is arguably more important than the offer itself," Smith advised.
"The successful marketers will be the ones who can be flexible, as well as understand these patterns and focus on connecting with active buyers at opportune times by leveraging both consumer data and predictive analytics," she added.
Data sourced from Mintel; additional content by Warc staff