Editor's note: Retail’s robust growth
All is well in the world of retailing. At least said the influential, and I might add usually correct, National Retail Federation. The Washington-based association increased its retail sales forecast for the entire year earlier this month, now saying that volume will increase in 2018 over 2017 numbers by a minimum of 4.5%, instead of the 3.8% to 4.4% range it had earlier predicted.
The association said that tax reform, a strong economy and other economic factors are helping retailers — and many other businesses — outperform expectations. A strong fourth quarter, which many expect, could make this the best year for retail in more than a decade.
“Higher wages, gains in disposable income, a strong job market and record-high household net worth have all set the stage for very robust growth in the nation’s consumer-driven economy,” said NRF president and CEO Matthew Shay in a press release. “Tax reform and economic stimulus have created jobs and put more money in consumers’ pockets, and retailers are seeing it in their bottom line. We knew this would be a good year, but the first half turned out to be even better than expected. However, a tremendous amount of uncertainty about the second half remains. It could be a banner year for the industry, or we could keep chugging along at the current rate.”
The association did throw one caveat in there. It warned that tariffs, a product of the growing trade war between the Trump administration and Europe and China, could dampen consumer confidence in the last quarter of the year.
I think the association is spot on with its forecast. My barometer, a much less scientific one that basically follows how crowded my neighborhood supermarket’s parking lot is, agrees wholeheartedly with the NRF’s prediction. With unemployment at near historic lows, wages increasing by a small (but respectable) number and consumer confidence high, shoppers are out and about spending money.
Great news for all retailers, whether brick-and-mortar or the new digital players. Consumers love to spend when they think times are good and, for now at least, times seem to be very good. Retailers need to take advantage of this while they can by offering as many choices as possible to get shoppers to trade up and buy more.
Retailers also have to watch for any change in head winds. While sales are booming, competition is still becoming more and more fierce as more players seek to gain the consumers’ attention, not to mention their wallets. Also, the aforementioned trade wars and higher-than-expected inflation numbers could throw a wrench into this well-oiled economic engine. And, we can never forget about oil prices and the possibility of the return of $4 and $5 a gallon gasoline.
Still, these are heady times for retailers. Enjoy them while they last, but remember to put some money away for a rainy day. It is going to come eventually, but hopefully not too soon.