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Retailers Stand to Make a Killing This Year's Holiday Season

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Going by the National Retail Federation’s ("NRF") recent sales projection, the retailers are all set to revel again in the euphoria of the upcoming holiday season brushing aside the apprehensions related to tariffs. Retailers are upbeat about the season with Americans looking more confident on the back of improving employment scene, tax reforms and rising wages. It also appears that consumer spending, which accounts for the two-third of the economic activity, will remain strong in the months ahead.

Data compiled by the nation's largest retail trade group calls for a 4.3-4.8% rise in November and December sales (excluding autos, gas and restaurant) to $717.45-$720.89 billion, up from $687.87 billion last year and better than the five-year average sales growth of 3.9%. However, the rate of growth shows a deceleration from 5.3% increase registered in 2017. Nevertheless, this hasn't toned down retailers’ enthusiasm in any way.

Deloitte’s recent holiday sales projection of a 5-5.6% increase also hints at happy times ahead for retailers. Holiday sales, excluding motor vehicles and gasoline, are likely to be more than $1.10 trillion between November 2018 and January 2019. Meanwhile, e-commerce sales are estimated to improve 17-22% to reach $128-$134 billion.

Retailers are ready to walk the extra mile to woo bargain hunters, through various means like early-hour store openings, huge discounts, smart promotional efforts and free shipping on online purchases. They are deploying resources to enhance omni-channel capacities, introducing brands, remodeling or refurbishing stores and expanding same-day delivery options to expedite the shopping process during the busiest part of the year. Additionally, retailers are rationalizing supply chain, improving store-related technology and augmenting ship-from-store capabilities.

Meanwhile, retail giants such as Target (TGT - Free Report) , Macy's (M - Free Report) and Gap (GPS - Free Report) have announced hiring plans to cope with a busy holiday season. Per media reports, Target intends to employ 1,20,000 associates, reflecting a 20% increase from the prior year. Gap is likely to take on approximately 65,000 seasonal associates, while Macy's intends to hire around 80,000 seasonal workers. According to NRF, retailers are likely to appoint 585,000-650,000 temporary employees this festive season, up from 582,500 in the last year.

Wrapping Up

No wonder the season, which accounts for a sizeable chunk of yearly revenues and profits, is a make or break time for retailers. With only a couple of months left for the festivities to begin, retail bellwethers from Amazon (AMZN - Free Report) to Walmart (WMT - Free Report) are sure pulling up socks to make a haul this upcoming season.

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