4Q crucial for retailers, who face uncertain outlook
NEW YORK (AP) — The fourth quarter is the most crucial time of the year for many retailers, who hope to make a significant portion of their revenue and profits during the three months that include the holiday season.
A look at some of the factors that are likely to affect shopping in the coming quarter:
— Consumers are anxious and spending less. Two recent measures of consumer sentiment, the Commerce Department’s August retail sales report and the Conference Board’s September consumer confidence survey, were sobering signs for the fourth quarter. Retailers’ perennial hope is that consumers won’t hold back because the holidays are a special time, but even a little tightening of each shopper’s budget can add up to lower sales overall for retailers.
— Tariffs may hurt. The Trump administration’s tariffs on goods imported from China includes clothing, linens and tableware, all of which are big sellers during the holiday season. Retailers must decide whether to try to find merchandise made in other countries or if they sell Chinese-made goods, whether to raise their prices. Retailers did get a partial reprieve when President Donald Trump delayed until Dec. 15 planned tariffs on thousands of other consumer goods; those duties would not affect items already on store shelves.
— Don’t look for must-have items. The highly sought-after gifts that once drove holiday shopping — like Elmo and holiday Barbie dolls, or, back in the 1980s, Cabbage Patch Kids — have been absent in recent years, noted Carlos Castelan, managing director of The Navio Group, a management consultancy based in Minneapolis. And many of the most popular products are electronics that are widely available. That can be a plus for small retailers who can cater more to their own clientele than trying to latch on to a trend.
— Online competition gets fiercer. More consumers are likely to do more of their shopping on their phones, tablets and PCs, looking for the lowest prices as well as speed. Traditional retailers can get shoppers to buy, but they must provide service that can’t be found online and an emotional connection that makes a trip to a store or mall worth it.
“Taking price out of the equation to win on experience and convenience is critical,” Castelan says.