Bain: Non-store sales to drive 90% of holiday growth; five tips to outperform
Retailers who hope to outperform this holiday season should emphasize value — no matter the price point.
That's one of five recommendations from Bain & Company, whose annual U.S. retail holiday forecast predicts "sub-average" 3% growth in U.S. retail sales, which is significantly lower than the 5.2% ten-year average. The global consulting firm estimates U.S. retail sales will reach a total of nearly $941 billion during November and December. (Bain's five tips for outperforming are at the end of the article.)
The Bain forecast for slower holiday growth is similar to one released last week by Deloitte, which predicted holiday sales are likely to increase between 2.3% and 3.3% between November and January.
Bain expects non-store sales to grow 9.5% year-over-year, driving about 90% of the holiday growth. In-store sales will remain relatively flat, at a growth rate of 0.5% year-over-year, the lowest rate since the Great Recession in 2008.
In-store growth will vary across categories, according to the Bain report, with general merchandise (excluding department stores), clothing and accessories, and grocery seeing the strongest growth. Department stores, sporting and hobby stores, furniture, building and gardening stores will experience negative single-digit growth.
Bain noted retailers continue to face challenges that may stifle holiday sales this season as shoppers allocate more of their wallet to costly non-discretionary spending — including housing and healthcare — and face growing credit card delinquency rates and lower savings rates. However, interest rate cuts from the Federal Reserve could help to bolster consumer confidence in the months ahead.
"It's been a relatively slow year for U.S. retail, as consumers have grappled with rising costs and growing unemployment," said Aaron Cheris, partner in Bain & Company's retail practice. “Interest rate cuts and a strong stock market performance could help to bolster consumer confidence, potentially contributing to at least modest sales growth. If retailers want to beat these gloomy expectations, they will need to get an early start, emphasizing value and finding ways to delight shoppers during a stressful season."
Five Tips
Bain offered the following tips for retailers to outperform this holiday season.
- Emphasize value, no matter the price point
- Entice consumers with intuitive search tools, personalized marketing, relevant gift lists and timely promotions
- Showcase exclusive products, collections, brands and partnerships
- Delight shoppers during a stressful season with upskilled holiday staff and more fulfillment options, including fast shipping and easy returns
- Make omnichannel easier — utilize excess store capacity to meet digital demand
