Q&A: Will holidays be 'Ho-Ho' or 'Ho-Hum?'
With Black Friday and Cyber Monday around the corner, retailers are hoping that they will prevail among the challenges of aggressive competition and potentially still-cautious shoppers. We asked portfolio manager Barbara Miller, who covers the global retail environment, for her views on what to expect this holiday shopping season.
Q: What is your outlook for holiday sales? We expect modest growth this holiday season, with the retail environment remaining highly promotional. In general, we see increasing evidence that brands—rather than specific retailers—have gained in importance as the growth of e-commerce and mobile technology enable consumers to find the items they seek in a wider variety of channels. As has been the case for some time, there will be pockets of strength and weakness across categories and retailers.
Q: What are likely drivers of consumer spending this season? We see the most favorable trends at the high end of the spending spectrum, where stock market performance and general wealth creation have driven greater confidence, and also given the appeal of luxury goods to an increasing base of emerging-markets consumers who are traveling abroad and shopping.
Q: How about deterrents? Although the economy has improved, there is still a need for more job creation and most U.S. consumers remain value oriented. Therefore, we expect a continued, highly competitive sales environment. The period between Thanksgiving and Christmas is nearly a week shorter than it was last year due to calendar shifts, making it even more critical to capture consumer attention effectively.
Q: Do you see any trends in consumer behavior that will affect holiday shopping? We continue to see a marked shift toward e-commerce and mobile shopping—retailers and/or brands lacking in either capability are at a disadvantage. Importantly, however, e-commerce options must be well assorted, reliable and price competitive. In addition, customization has gained popularity among younger consumers seeking to differentiate their fashion and other personal items.
Q: What categories do you expect will be winners this year? We like the prospects for certain luxury goods purveyors, as they are somewhat protected from the competitive pricing environment due to product differentiation and narrower distribution. Handbags, shoes and other accessories continue to outpace sales of apparel. A continued emphasis on home repair and remodel could lead to better sales of appliances to outfit kitchen makeovers, as well as certain consumer electronics, such as televisions and other entertainment devices, for newly created or expanded family rooms and entertainment areas. New videogame technology also may spur sales in that sub sector. We expect those categories to remain highly competitive. Mobile technology—smart phones, laptops and tablets—remains a favorite among young consumers.
Q: Do you believe Black Friday/Cyber Monday have the same draw for shoppers—and value for retailers? Black Friday and Cyber Monday are significant sales days. But with more retailers opening on Thanksgiving Day, the Internet open 24/7 and the Saturday before Christmas remaining a critical sales day, it is difficult to judge the strength of the season based on these two days alone.
Q: Are shoppers outside the U.S. as engaged with holiday shopping? Shoppers are active during December throughout Western countries where Christmas is an important holiday. We also have seen other holidays—such as Chinese New Year, Golden Week and Ramadan—affect retail sales during different months in other parts of the world. Hence, brands that sell internationally are experiencing a wider range of seasonality that can translate to opportunity.
Thank you, Barbara.