Boom Or Bust? How Will Retail Fare In The New Year?

by Knowledge Wharton

Wharton’s Barbara Kahn and Columbia’s Mark A. Cohen discuss the U.S. retail outlook for 2018.

Initial market reports indicate the 2017 holiday season was a lucrative one for American retailers, with sales increasing 5% over the previous year. Online sales were up around 18%, according to early reports, and consumer spending reached numbers not seen since 2011. Despite smooth sailing through the holidays, it was a turbulent 2017 for many retailers and there is still plenty of choppy water ahead as brands try to adjust to rapidly changing consumer behavior. Wharton marketing professor Barbara Kahn joined Mark A. Cohen, director of retail studies and adjunct professor at Columbia University Graduate School of Business, on the [email protected] show on Wharton Business Radio on SiriusXM channel 111 to discuss the retail outlook for 2018.

The following are five key points from their conversation.

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Strong holiday sales were boosted by weather, timing

While the final numbers on holiday sales won’t be known for a few more weeks, things are looking undeniably good for retailers across the spectrum, especially those with a strong online presence.

Both Cohen and Kahn noted that the biggest sales surge came in the days right before Christmas, which fell on a Monday. The sales uptick likely was helped by having a weekend just before the holiday and relatively good weather across the country, encouraging shoppers to visit physical stores for last-minute deals.

“I’m a big believer in physical stores, so I always like to see good news of people enjoying the experience or the shopping aspects of the physical stores,” Kahn said.

For the most successful retailers, it’s all about winning

The professors think the big retail winners in 2017 will see continued success in the coming year because they recognize changing shopping behaviors and are working to turn the ship around, rather than ignore the trends. Conversely, retail losers will probably keep steering into the iceberg in 2018.