Wed | Nov 14, 2018

Despite merry holidays, retailers face challenges in 2018

Published:Tuesday | January 16, 2018 | 12:00 AM
In this January 11, 2017 file photo, an H&M store window advertises a sale, in New York.


Retailers are riding high after ebullient US consumers shopped at the healthiest pace in more than a decade over the holiday season. But merchants can't afford to rest easy.

None of the pressure on them has eased, and the fight for customers' attention will only intensify. Retailers trying to hold their own against an expanding Amazon will have to keep sprucing up their stores and investing in the quick delivery that shoppers want. Those kinds of moves may bite into their profits, but they'll save money from tax changes.

Store closures, already at a post-recession high, could keep coming. And in a sign of just how critical it is that stores get delivery right, Walmart's Sam's Club says it's converting some of the locations it is closing into e-commerce fulfillment centres. Companies trying to leverage their stores may think about following.

Several retailers, including Target, Kohl's, and J.C. Penney, reported solid holiday sales gains. Retail sales rose 0.4 per cent in December, the Commerce Department said Friday, after a 0.9 per cent surge in November. Those figures include online sales.




Spending for the two months combined was the best since 2005, according to IHS Markit, an economic consulting firm. Sales at home and garden stores, and at restaurants and bars did well.

And the National Retail Federation (NRF) trade group said that by its measure, which exclude sales from autos, gas and restaurants, and includes non-store sales like those from catalogues, holiday spending rose a better-than-expected 5.5 per cent. That sailed past the group's original projections and marked the biggest increase since the 5.2 per cent gain in 2010. Online shopping, which is included in the results, increased 11.5 per cent.

"It was certainly a vibrant season," said Jack Kleinhenz, chief economist at the NRF. "This will charge the batteries of consumption for 2018."