A first peek at holiday spending: Jolly

Media economy

Indeed, the annual gift-giving season is forecast to be robust....so go after all the local-direct in your market that's not on the air now. Philip Jay LeNoble, Ph.D. CA

 

By Bill Cromwell

August 25, 2015

   

A big stock selloff on Wall Street has sparked fears over the state of the economy.
But the first round of spending projections for the holiday season  would seem to dismiss those fears.
Right now it looks as though it’s going to be quite a jolly holiday, both for retailers and ad sellers.
That’s according to a new report from eMarketer, which projects spending on holiday gifts will be up 5.7 percent this year, to $885.70 billion, marking the best year-to-year gain since 2011.
That’s a big improvement over an earlier forecast from the ad tracking firm, which predicted a 3.2 percent rise in holiday spending this year.

And it should result in a healthy bump in advertising, too, as retailers compete to lure in shoppers after a slow first half of the year.

Credit lower gas prices for a good part of the rosier outlook.
“This forecast is driven primarily by the fact that gas station sales, which make up roughly 12 percent of overall retail sales, dropped rather dramatically in late 2014,” says Monica Peart, an eMarketer analyst.

“Increases in real income from wages, further decreases in unemployment and an increased willingness to spend in traditional retail categories that missed out on the windfall in gas prices earlier on in the year should also drive growth.”

So far this year has not been great for retailers. In June retail spending was even to the previous year, and it rose a mere 0.6 percent in July, according to the Commerce Department.
But signs for fall are promising. Gas is well below $3 a gallon, with crude oil selling at a six-year low. That should free up money in people’s wallets for holiday spending.

Meanwhile, the unemployment rate has stayed steady while wages are going up for employees at Wal-Mart and many fast food restaurants.

That should result in stronger holiday ad spending.

Retailers such as Wal-Mart and Macy’s have struggled this year, and they want to draw people into their stores to get a share of the increased holiday spending.
This may also mean a big bump in mobile advertising, as eMarketer is predicting a significant increase in mobile buying.

A quarter of online sales will be made via smartphones and tablets.
“As US consumers become more comfortable with conducting a litany of activities with their smartphones, fewer people are putting down the phone to make a purchase using another device,” Peart says.

“Consumers are opting to complete their transaction with the same device they began the shopping journey with, and that is increasingly with a smartphone.”