Happy holidays for retailers but a loyal customer is the gift that keeps giving

(This post originally appeared on The Guardian)

For many retailers, holiday sales can amount to as much as 30% of annual profits, which means that having a good holiday season can make or break a merchant’s year. So for all those merchants hoping for a profitable year, I’ve got some good news: whether you sell your goods from a brick-and-mortar store or online, it looks like this holiday season is going to be not just good … but great.

Based on a survey of more than 7,300 adults, the National Retail Federation predicts that consumers will spend an average of $1,007.24 this holiday season, which is a 4.1% increase over the $967.13 spent last year. Not surprising, the organization also says that total retail sales in November and December would be up between 4.3 to 4.8% over sales in 2017. Another survey from consulting firm Deloitte is even more bullish. The consulting firm’s annual holiday economic forecast, which was based on a survey of more than 4,000 shoppers, projects that total retail sales will increase anywhere from 5 to 5.6%.

The reasons are obvious. “Confidence is near an all-time high, unemployment is the lowest we’ve seen in decades and take-home wages are up,” the NRF’s president and CEO, Matthew Shay, said in a press release. Both surveys found that consumers are upbeat about the economy.

Most reports say that shoppers will be splitting their time and money between in-store and online purchases. Deloitte is expecting online sales to increase anywhere from 17 to 22% over last year. Software firm Adobe projects that online sales will reach $124bn this year, an increase of almost 15%.

So what about the effect of the Trump tariffs, particularly on Chinese goods, on prices? Won’t this dampen consumers’ willingness to buy? Most believe the impact will be minimal. Most of the items that retailers will be selling were purchased before the tariffs took effect.

According to the NRF, gift cards remain the hottest item (it’s been that way for 12 years in a row), followed by clothing, books/movies/music, electronics, home decor and jewelry. Adobe predicts that games like Tekken 3, Ridge Racer Type 4 and Final Fantasy VII will also perform well. “Experience” gifts – such as spas, restaurants and entertainment – have also been a big growth area of late. Deloitte says that such purchases now represent about 40% of a consumer’s holiday budget, which is up significantly over the past five years. Most shoppers plan to start their buying as early as November.

It’s great news for retailers, both big and small. But the smartest merchants I know are not just thinking about the holidays. They’re looking ahead. They’re expanding their channels (According to Adobe, retailers with both online and physical footprints are expected to see a 28% higher conversion online in comparison with retailers lacking a traditional storefront). They’re also gathering data from everyone who visits their stores and their websites in an effort to bolster their 2019 post-holiday marketing.

Why? Because no business should be so reliant on the holidays alone for their profits. And although the economy is strong now, we’ve all learned that nothing lasts forever. The value of a loyal customer can return rewards all year long.