NRF’s 2016 fourth-quarter forecast: Blue skies ahead?

I published the following comment on RetailWire after the NRF forecast a 3.6% sales increase for Q4 but before the outcome of this week’s election:

If somebody tracked the annual NRF holiday forecast compared to actual results, I think they would find that this trade organization is consistently too optimistic. I feel the same way about their 2016 number.

And does their number include surging growth by e-commerce retailers, especially Amazon, or strictly brick-and-mortar and multichannel retailers like Macy’s? There isn’t much evidence from the numbers we’ve seen all year (especially from midtier retailers) to expect a sudden surge in demand. Some retailers have especially easy comparisons to 2015 (which will help), but I’d be pleasantly surprised to see numbers beyond the 2-3% range.

And I’m adding a couple of other comments posted just before and just after the election:

Consumer confidence measures are rising, along with the GDP, but the rosy forecasts for 4th quarter sales still feel high. General merchandisers are likely to benefit from soft comparisons and colder weather than last year, but there is nothing in the sales trends so far this year pointing to a huge comeback. There also isn’t much evidence of a big merchandise idea or key item likely to drive customers to stores.

Without tipping my hand, I also believe that next Tuesday’s election results could provide a “relief rally” by providing some closure one way or the other. Of course, I said the same thing before the 2000 election…

Now, a post-election post-mortem:

I’m trying to set aside ideology here, because the split verdict on the election leaves voters uncertain on both sides. Will Mr. Trump live up to his harshest platform promises or try to moderate his views? Today, nobody knows whether the answer to that question will chill 4th quarter sales or stimulate them.

So the only way to answer this over the long haul is to look at the economic impact on consumers. Tax cuts and infrastructure spending are good for businesses and consumers but (on the other hand) protectionism and tariffs will lead to higher prices. And any effort to restrict (or reverse) immigration patterns will stall the population growth that our economy depends on.

Finally, the plans to “repeal and replace” the ACA may have a huge impact. On one hand, lower costs benefit consumers and small businesses; on the other hand, if millions lose insurance coverage they will face an economic threat that will crimp their spending for the foreseeable future.



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