- American retail sales (excluding autos and gas stations)
expected to rise four percent, year over year, this holiday
season
- E-commerce across the United
States is in the midst of a strong year, growing at a steady
annual rate of approximately 15 percent
- Toys experiencing a fourth consecutive year of growth,
despite glut of movie-themed toys (top toys include: Fingerlings by
Wowwee, LOL Surprize by MGA Entertainment, Hatchimals by
Spinmaster, JoJo Siwa dolls and PJ
Masks by Just Play, Luvabella by Spinmaster and POP! By
Funko)
NEW YORK, Nov. 24, 2017 /PRNewswire/ - As Americans prepare
for the biggest retail weekend of the year, BMO analysts and
economists are forecasting a notably strong U.S. holiday shopping
season. This year, shoppers will benefit from rising purchasing
power and anticipated tax cuts, and toy sales will experience a
fourth year of growth despite an overabundance of movie toys and
general toy sale softness.
"There are a lot of reasons to be optimistic about holiday
shopping this year, largely because American consumers are backed
by strong demand fundamentals," said Sal
Guatieri, Senior Economist, BMO Capital Markets. "With
unemployment rates reaching 17-year lows, consumer confidence at
17-year highs and household wealth at record highs, we expect the
2017 season performance to be the best since 2014, with sales
rising at a solid four percent annual rate."
Looking forward, BMO experts expect continued challenges for
traditional brick-and-mortar retailers, but also see significant
opportunities as e-commerce players leverage technology to improve
service and reduce prices.
"Amazon has been a retail disruptor and a major driver of the
growth of e-commerce in the United
States," said Dan Salmon,
Analyst, BMO Capital Markets. "Shopping through Amazon has
increasingly become the preference for many Americans, as the
company utilizes artificial intelligence and other technologies to
improve logistics and keep prices competitive. With strong
quarterly growth in the sector, continued increase in Prime
memberships and perks, the outlook for this e-commerce giant is
strong."
E-commerce across the United
States, in general, is in the midst of a strong year,
growing at a steady annual rate of around 15 percent.
"As e-commerce continues to grow faster than traditional retail
sales, we will see positive implications for industries such as
packaging, shipping and warehousing," said Mr. Guatieri.
For the toy industry, movie fatigue has cut into manufacturers'
potential sales. But, innovative toys profiled through social
media, early rising toy sales starting in September and continued
massive growth from board games will keep this year positive.
BMO Toys and Leisure Senior Analyst Gerrick Johnson forecasts a fourth consecutive
year of growth in 2017 at around 1.5 percent, given early
indications.
"Innovation is at the heart of growth in the industry this
year," said Mr. Johnson. "From privately-owned companies taking
advantage of nimble business, to the surge from a new genre of
board games (called table top games), companies that are innovating
are growing."
After three years of above-average growth in toy sales during
the holiday season, relative soft growth in 2017 can be attributed
in part to "movie fatigue".
"We have far more movie toys than in past years and they have
not been driving the sales that many toy companies anticipated,"
said Mr. Johnson. "Too many movies released one after another
without new characters that resonated with kids became a bad bet
for many major toy manufacturers."
Mr. Johnson cites smaller private companies as the key
performance drivers this year, creating and marketing toys coming
out of untraditional places like social media and YouTube. "Kids
are discovering toys through YouTube and Instagram, watching
unboxing and toy explanation videos. The concept of play through
social media is emerging and is already affecting the market in a
positive way. We expect that trend to continue through this holiday
season."
BMO Capital Markets experts forecast the following trends
ahead of the U.S. holiday shopping season:
Sal Guatieri, Senior
Economist, BMO Capital Markets:
- The economy continues to churn out a decent number of jobs
(around 170,000 on average this year), enough to drive the jobless
rate down to near 17-year lows.
- Wage growth has picked up this year. The Atlanta Fed's wage
measure shows the strongest gains in eight years at over three
percent. The number of Americans who remain on unemployment
insurance is the lowest in more than four decades.
- Anticipation of sizeable tax cuts from Congress could pull some
spending forward.
- Record-breaking stock markets should lift household wealth and
confidence, supporting holiday spending.
- Overall, we should see American retail sales (excluding autos
and gas stations) grow at a solid four percent annual rate this
holiday season (covering November/December) compared with 3.8
percent last season.
Gerrick Johnson, Analyst, Toys
and Leisure
- BMO expects U.S. holiday sales to grow 1.5 percent this year.
This slowdown in growth from the last few years is owing to "movie
fatigue" and the glut of movie themed toys on the market.
- Top items this year include Fingerlings by Wowwee, LOL Surprize
by MGA Entertainment, Hatchimals by Spinmaster, JoJo Siwa dolls by Just Play, PJ Masks by
Just Play, Luvabella by Spinmaster, and POP! By Funko.
- For the year, 1.5 percent growth represents the fourth
consecutive year of growth – the first time this has happened in
almost 20 years.
- The toy industry is benefiting from strong innovation,
especially from smaller private companies who turn toward
untraditional sources for toy ideas. We also continue to see
a trend within toys towards family-based activities, which is
helping to drive growth in certain categories like board games and
construction.
- An uptick in birth rates over the past few years as well as the
growing proportion of older parents is helping toys sales,
especially in the pre-school range. Other strong categories include
dolls, collectibles and outdoor toys.
About BMO Financial Group
Serving customers for 200
years and counting, BMO is a highly diversified financial services
provider – the 8th largest bank, by assets, in North America. With total assets of
$709 billion as of July 31, 2017, and more than 45,000 employees,
BMO provides a broad range of personal and commercial banking,
wealth management and investment banking products and services to
more than 12 million customers and conducts business through three
operating groups: Personal and Commercial Banking, Wealth
Management and BMO Capital Markets.
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or write to Editorial Department, BMO Capital Markets, 3 Times
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or Editorial Department, BMO Capital Markets, 1 First Canadian
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SOURCE BMO Financial Group