Ecommerce will continue to grow faster than in-store, as it has for quite some time, but the gains for physical retail this season are expected to be impressive, according to new research from Bain & Co. The consulting company is a little more optimistic than others on the overall holiday season, forecasting a 4 percent gain versus last year, but that is down from the ten-year average of 5.2 percent. Competing factors are consumer caution balanced by wage growth and the potential for continued interest rate cuts and strength in the stock market, it said.
Bain said it is estimating in-store sales will grow 2.75 percent over last year, contributing more than half of that overall 4 percent growth rate. It is forecasting the biggest gains in clothing and accessories, general merchandise (excluding department stores) and health and personal care.
On the negative side, Bain is predicting sales at electronics and appliances, building and garden and furniture stores will drop against year-ago results.
Overall, 36 percent of consumers plan to do all or most shopping in store, while 26 percent will shop all or mostly online and 38 percent plan an equal split of between physical and online.
Bain, like other researchers, said consumer pessimism on the overall economy was the key factor in expected purchasing patterns, noting that severe credit delinquencies -- those 90 or more days past due -- have risen about 3 percent year over year, reaching their highest level since 2011. Borrowers under age 30 seemed to be especially delinquent. Savings have been flat while labor force participation fell 0.4 percentage points in August when its research was conducted. Still, it pointed to increases in hourly wage and the robust stock market as factors on the positive side.
Bain advised retailers to be aggressive in their promotions this holiday and use technology wherever possible to manage their businesses.
“This holiday season will be a mixed one for U.S. retailers,” said Aaron Cheris, a Bain Retail practice partner. “Consumers are cautious and facing financial pressure, but they are also feeling the lift from higher wages and a strong stock market. Leading retailers will strike the right balance, leaning into value, creating warm human experiences while implementing new technologies, and capitalizing on big events like Black Friday to capture share from competitors.”