With disposable personal income climbing and consumer confidence staying elevated across the U.S., the holiday shopping season could bring healthier sales for retailers to cap off a tumultuous year.
Deloitte said it expects retailers to see holiday sales growth of as much as 4.5 percent. Last year, total sales for the season climbed 3.6 percent, matching results in 2015.
E-commerce sales, meanwhile, are expected to increase 18 to 21 percent during the 2017 holiday season, the firm found. Digital sales climbed 14.3 percent in 2016.
“Sentiment and spending indicators are firing on all cylinders, but the question is: How will retailers respond given the profound disruption across the industry?” said Rod Sides, who heads up Deloitte’s Retail & Distribution practice.
“The good news is retail is thriving, and it is the proliferation of new, niche retailers that is resulting in share constantly changing hands,” Sides said.
Deloitte expects total holiday sales, which are seasonally adjusted and exclude motor vehicles and gasoline sales, to reach $1.04 trillion to $1.05 trillion for the period, which stretches from November through January. E-commerce sales could peak at $114 billion, according to Deloitte.
On the whole, the consumer appears to be a lot more stable and certain heading into the holiday season, Sides told CNBC.
“Last year we were going through a vicious election cycle … with a lot of emotional reaction on both sides. I think that the consumer has settled down a little bit,” Sides said.
Some potential threats to the retail industry this holiday season include an increase in the number of consumers saving money, which would cause spending to dip.
Heavy hurricane activity across the South also remains an unknown.
“Retailers [facing challenges] should modify their assumptions about what drives traffic, engagement and holiday sales growth, and realign around customer experience, creating relevant, emotional and inspirational connections that go beyond just product, price and assortment,” Sides said.
With shoppers being “smarter than ever,” Sides said he anticipates e-retailers’ share of the market to continue to grow, but that doesn’t mean brick-and-mortar guys are losing a share of the pie. “Even the big retailers continue to pick up e-commerce share.”
Sides added that despite more “political noise” in the news today, consumers largely tune that out. However, meaningful tax reform put in place by the Trump administration before the year is over could actually bolster spending into the holidays, he said.
Another positive sign: Retailers are likely to increase hiring of temporary holiday workers. Target, for example, plans to hire 100,000 workers for the 2017 holidays, up more than 40 percent from last year.