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Bethesda Row in Maryland decorated for the holidays
Public Policy

No Shutdown, No Snowstorm, No Problem This Season

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Matthew Shay

What a difference a year makes.

This time a year ago, consumer confidence was reeling after a government shutdown. The time between Thanksgiving and Christmas was almost a week shorter than the year before, reducing the number of selling days during retailers’ most important time of the year. And one of the coldest winters in recent memory was beginning, keeping many shoppers at home. As a result, holiday retail sales grew only a modest 3.1 percent.

This year, Congress has kept the government running, there’s an extra day between Thanksgiving and Christmas and — while it’s too soon to predict the weather — only 41 percent of shoppers are worried about the economy, down from 51 percent last year. Unemployment was at 5.9 percent in September, down from 7.2 percent at the same time last year and at the lowest level since July 2008.

As a result, NRF is forecasting a healthy 4.1 percent increase in holiday sales, a full percentage point higher than last year. And our research shows consumers are expected to spend an average of $804, totaling $616.9 billion.

Consumers are still looking for bargains and Washington still has work to do (like addressing online sales tax collection, fixing the flawed Affordable Care Act and blocking job killers like a minimum wage hike or overtime expansion), but that’s a lot better outlook than a year ago.

Many consumers have already begun shopping — 40 percent were in stores before Halloween — but Black Friday remains the traditional kickoff to the holiday season. In fact, the spending frenzy has grown to encompass both ends of the long weekend. Many retailers now open on Thanksgiving Day, Small Business Saturday has quickly grown as the day when consumers are encouraged to embrace independent merchants and millions of shoppers go online on Cyber Monday to partake of endless e-commerce deals.

Last year, 45 million people shopped on Thanksgiving Day, 92 million on Black Friday and 131 million on Cyber Monday. This year, we will be tracking Small Business Saturday for the first time and expect the numbers to be significant — more than 95 percent of retailers are small businesses operating a single location. These small retailers range from entrepreneurial startups to established icons of their communities handed down from generation to generation; all deserve consumers’ support as they struggle against larger competitors and, increasingly, online sellers who might be half a world away.

A strong increase in holiday sales would be a welcome boost for retailers given the volatile first half of the year and the uneventful summer. Though consumer incomes and spending patterns have grown moderately but erratically this year, shoppers are clearly in a better place than last year and the extra spending power could translate into good news for retailers.

Our industry has plenty of reasons to be optimistic this holiday season. But it will still be up to retailers to devise the right mix of products and value that will make consumers respond.

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