The trade war could determine how much holiday shoppers spend this year, the National Retail Federation said Thursday morning.
Citing “uncertainty over trade” as a potential drag on the season, the trade group estimates that holiday retail sales will rise between 3.8% and 4.2% this year, excluding autos, gasoline and restaurants. This equates to sales between $727.9 billion and $730.7 billion, an above-average growth.
Holiday retail sales have increased an average of 3.7% over the past five years. However, NRF’s sales range is below some other forecasts by retail industry consultants, which call for growth above 5%.
NRF also drew attention on Thursday to a growing gap between winners and losers in the industry ahead of this holiday season, following a recent spate of bankruptcy filings.
“It’s getting a little tougher there,” NRF CEO Matt Shay said on a media call, adding that the retail sector isn’t seeing “universal growth.” The winners, he said, are those who invest in their supply chains and make shopping as convenient as possible.
Teenage clothing retailer Forever 21, for example, filed for bankruptcy on Sunday evening and plans to close around 180 stores. Department store chain Barneys New York filed for bankruptcy in August. It’s amid a wave of announced store closures across the United States, many of them in malls, that are expected to eclipse a record high this year. So far in 2019, major retailers have announced plans to close 8,558 stores in the United States, while opening 3,446, according to a Coresight Research tracker.
But an ongoing trade war remains the biggest headache that could impact holiday sales this year. The United States and China are expected to resume trade talks later this month.
“There has clearly been a slowdown caused by considerable uncertainty around issues such as trade, interest rates, global risk factors and political rhetoric,” Shay said. “Consumers are in good financial health and retailers are expecting a strong holiday season. However, confidence could be eroded by the continued deterioration of these and other variables.”
In 2018, according to NRF, vacation sales grew by only 2.1%, missing an expected growth of between 4.3% and 4.8%. A choppy stock market was expected to weigh on consumer spending, especially among wealthier shoppers.
NRF, meanwhile, has been a strong voice for retailers who oppose the introduction of additional tariffs. Shay said last month, “This trade war has gone on far too long and the harmful consequences for American businesses and consumers continue to grow.”
The group expects the tariffs to drive up consumer prices, which will ultimately hurt consumer spending.
“There are probably very few precedents for this uncertain macroeconomic environment. … There are many moving parts and many distractions that make forecasting difficult,” NRF chief economist Jack Kleinhenz said Thursday.
NRF said a September survey of 7,419 consumers over the age of 18 found that 79% of people were concerned about tariffs driving up prices and affecting their purchases.
He said he expects online and other non-store sales in 2019, which are included in his total holiday sales forecast, to increase between 11% and 14%, to an amount between $162.6 billion and $166.9 billion.
NRF is also asking retailers to hire between 530,000 and 590,000 seasonal workers this year, up from 554,000 in 2018. Macy’s on Thursday announced plans to hire 80,000 temporary workers for the holidays, in line with its goals in 2018. Target said it. plans to hire 130,000 people, up from 120,000 last year. Kohl’s is aiming for 90,000, matching its 2018 hiring goals.
However, with an incredibly tight U.S. job market, many of these companies need to get creative by offering better benefits or paying higher wages to retain talent.