Holiday retail sales during November & December are expected to grow 8.5% to 10.5% over 2020 to between $843 billion & $859 billion, forecasted the National Retail Federation (NRF) in late October.
Even at the low end of its forecast, that would be both the largest growth rate – topping last year’s impressive 8.2% – and the largest total amount – beating last year’s $777 billion – on record.
“Several factors are coming together to have a major impact on the holiday outlook, but household fundamentals are a bright spot in the uncertain present,” said NRF Chief Economist Jack Kleinhenz. “Consumers are in a favorable position going into the last months of the year and spending because they can.”
A “savings buffer” of about $2.5 trillion accumulated by consumers who have largely stayed home rather than dining out or traveling during the pandemic has “supercharged” spending, NRF cites. Income is growing in the form of more jobs, more hours and higher wages reflecting businesses’ competition for workers during the current labor shortage. Household wealth hit another record high during the second quarter and has boosted consumer confidence.
Regarding annual retail sales for 2021, year over year, NRF forecasted in late June growth between 10.5% and 13.5% to more than $4.44 trillion this year, as the economy accelerates its pace of recovery.
Spending has continued at a brisk pace throughout 2021 – up 14.5% year-over-year for the first nine months – and has returned to pre-pandemic levels for many retail categories. While some individuals who lost jobs last year still face financial difficulty, data tracked by Harvard University shows spending by low-income consumers was up 22% at the end of September compared with pre-pandemic January 2020. The number appears to reflect enhanced unemployment benefits and other stimulus money, such as the new child tax credit.
Kleinhenz says the strong growth in income and “stockpiled savings” should help spending overcome inflation that has been driven both by consumer demand and supply chain disruptions. The challenge when and if sales begin to fall will be whether the drop is caused by weaker demand or reduced product availability.
Holiday Spending Up
People have an overwhelming desire to have a normal holiday and get back with friends and family, that’s the psyche of the country. “Customers are eager to show their loved ones how much they care, and jewelry is the perfect way to send that sentiment,” cheers Theresa Namie, merchandise manager for Ostbye.
Ostbye has great expectations for holiday business, as so many of its retailers are having a great year, Namie says, and the company expects that to continue into the New Year.
“Our holiday flyer has our best sellers and some newer designs that are guaranteed in stock up until Christmas Eve, so we know those will be hugely popular,” says Namie. “Some of our classic statement rings in higher carat weight will be a big hit for the holidays, as well. We are fortunate to carry a variety of products to meet the price points and style of today’s consumer.”
Michael Lerche, president/COO of Goldstar Jewellery expects jewelry products in all categories will do well this holiday season. “The holidays for jewelry will continue to be very strong,” he believes, noting that engagement/wedding and anniversary jewelry sales have been robust. Moreover, men’s diamond rings, and body jewelry have seen significant growth this year.
Ramping up for a busy and successful fourth quarter, Novell Global’s Sean McCormick, sales and marketing, says the manufacturer thus far is not disappointed in business. He underscores that engagement and wedding related jewelry was, is and always will be the bestselling product lines! With a wedding boom expected for 2022, these purchases are already happening now in 2021.
Good Year, Challenges to Overcome
2021 has been a good year for the jewelry business. “We have surpassed sales for both 2020 and 2019,” Namie shares. “2020 was tough for everyone, so it makes sense that 2021 has been redemption for so many in our industry.”
Namie attributes Ostbye’s success to its focus on creating designs that have broad-based consumer appeal. “We have programs for anniversary bands and birthstones that are tried and true and continue to be that way. We added new chevron style birthstone bands that are great for more than just birthstone rings, like creating a unique color look or styled as a wedding band. We introduced our ‘Enhanceables’ pendants that can be worn three different ways, and reversible earrings that have been well received.”
Lerche concurs that sales have been “way up over 2020 and even up double-digits over 2019.” But he acknowledges the challenges. “Supply, especially findings, and diamond supply and pricing have been affected,” he shares. “There are many delays in shipping as well. Diamond prices have surged while many retailers have not accepted the raise, so margins have been affected.”
Namie adds that because business is busier, companies need more help, and finding good employees is important. “We want them to fit into our core values, be an intricate part of the team, and of course trained before the holidays,” she says of the tall order companies face.
McCormick agrees that staffing has been among the biggest challenges. “Finding and/or keeping qualified craftsmen and office staff have been difficult this year.”
The 2021 holiday season is retailers “Hail Mary” Natalie Kotlyar, national managing partner for the global accounting firm BDO, told Forbes in a recent article by luxury market analyst Pam Danziger. Looking out further, she says, “Retail is facing a trifecta of challenges that are not going to be easily or quickly resolved. You have supply chain issues. You have employment concerns and hanging overall is inflation. None of these are short-term issues.” Kotlyar expects supply-chain shortfalls to carry over through next year’s holiday season.
As for now, retailers’ prospects for holiday 2021 are pretty well fixed, Danziger writes. “If they ordered right and the products can get to them in time, and they have the bodies to get them up on the shelves in the store, they should be propelled forward by the still strong demand tailwinds.”
Vendors are prepared for 2022 Valentine’s Day, and for those that can order now, Namie says, it’s a win-win to have that inventory during the holidays with carry-over into Valentine’s Day. McCormick advocates retailers order three months earlier than usual.