With the 2016 U.S. presidential election less than three months away and Brexit still an ongoing financial point of concern, retailers are keeping a keen eye on political matters as the holiday season gets closer.
Even as uncertainty abounds around global developments, retailers have strong opinions on how sales the rest of the year will play out:
- 65% of retailers believe the election will have a strong impact on spending in the second half of the year;
- 68% of retailers predict that the Brexit vote will have no impact on holiday 2016 business in the U.S.; and
- 60% of respondents said they believe that holiday sales will increase compared to last year, with 25% expecting sales to increase by 5%-10%.
The RTP team discusses the potential effects the upcoming election and Brexit will have on the U.S. economy when the holiday sales season kicks in in earnest.
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Debbie Hauss, Editor-in-Chief: Presidential elections always impact the economy in some way. As CNBC points out, presidential election years are emotional times for consumers. The market is typically more volatile during an election year vs. the years before and after. That said, 2016 has been faring well for retail, for the most part. Some exceptions include malls and department stores, of course. Other positive factors that may affect consumers’ desire to spend for the holidays include: oil prices are low, interest rates are low and inflation is low. My prediction is that this year’s presidential election will certainly boost Halloween costume sales and probably liquor sales if the ridiculousness continues. Consumers will probably want to shop to make themselves feel better about the presidential battle — or at least distract themselves from it.
Adam Blair, Executive Editor: I’m shocked, shocked that retailers are as divided as everyone else about the presidential election — in this case, its impact on holiday sales. According to a survey by First Insight conducted earlier this month, 34% believe the election will have a positive effect, 31% say it will have a negative effect, and 35% believe its impact will be neutral. I could certainly see consumers holding off on holiday purchases until the election is decided, then a) rushing out to celebrate with a buying binge, or b) staying home and shopping online as a way to heal their psychic wounds. (I’ll leave it to you to decide which voters will be ecstatic and which will be depressed). The good news is that retailers seem optimistic about the upcoming holidays, with more than half projecting overall sales increases of 5% or more this year compared to 2015. Let’s hope they’re right.
Alicia Fiorletta Esposito, Content Strategist: It’s understandable that some retailers believe that political developments, such as Brexit and the U.S. election, will have some kind of impact on holiday sales. Politics, for better or for worse, impact economic outlook and consumer spending, so executives need to be prepared for anything. Despite the volatile political climate in the U.S., though, I think the economic outlook is far more positive than years past. Not to mention, retailers have really upped the ante in terms of their marketing, pricing and promotional strategies, so I think in the long run, those efforts and consumers’ eagerness to spend for the holidays will have a more significant impact than the election results.
David DeZuzio, Managing Editor: I don’t believe this year’s election will have a negative impact on holiday sales. Of course, that may be subject to change once the presidential debates start. If we have a candidate that promises to drastically cut taxes, lower health care costs, and help lower- and middle-class families, not only would you have a landslide winner, you would also have an insanely merry happy holiday season for retailers. If the country sees the next president as a potential troublemaker/dictator/loose cannon, the purse strings may tighten a bit, but as Klaudia mentions below, it’s the most wonderful time of the year, so Americans are going to spend anyway. Now, next year’s holiday sales are a different story, as no one can predict what the next administration is going to do to our country and our financial stability. But for this year, it’s either going to be one last holiday hurrah for spenders or a continuation of holiday hurrahs, depending on whom you are voting for. Spend wisely!
Klaudia Tirico, Associate Editor: Personally, I don’t believe that recent developments such as Brexit and the U.S. election will put a damper on holiday sales. If anything, I think consumers will use the potentially not-so-cheerful time to put some happiness into others’ lives by shopping more and ensuring an exciting holiday season for their loved ones. The data provided by First Insight is not all that surprising to me: 68% of retailers said Brexit will have no impact on holiday 2016, while more than 60% said they believe holiday sales will increase compared to 2015. Retailers, especially department stores, will do anything to avoid reliving the lackluster sales of holiday 2015, so I think they will definitely boost their marketing efforts to get consumers excited about holiday shopping again. It’s the most wonderful time of the year, no matter who gets elected, right? I hope so!
Glenn Taylor, Associate Editor: It’s definitely fair for retailers to have a feeling of uncertainty flowing into November. Regardless of the outcome, a different administration will be in charge of U.S. policy for the first time in eight years, so foreign and domestic policies will see slight-to-serious changes either way. Elements such as pricing will likely come into play, particularly if there becomes a greater or lesser demand for a product. While uncertainty remains on the retail side, I still believe shoppers are going to continue to shop as much as they always have during the holiday. Last year may have been a rough season for traditional brands that once had been known to dominate the two-month stretch. However, non-store (e-Commerce and mobile commerce) sales increases of 9% continued to show that retailers just need to start shifting their focus on how to approach their holiday marketing campaigns. For those brands that end up having a poorer-than-expected 2016 holiday season, it will be interesting to see how quickly they fall back on the “current events” excuse if they don’t take the right approach to start.
