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Forecast: Retail Holiday Sales to Increase 3.6-4%

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Forecast: Retail Holiday Sales to Increase 3.6-4%

Digital interactions to influence two-thirds of every dollar spent in-store during the holiday season.

Retailers should see an uptick in holiday sales in stores and online this year, according to professional services giant Deloitte's.

"We anticipate a modest increase in sales growth as economic fundamentals that boost spending improve further," said Daniel Bachman, Deloitte's senior U.S. economist. "Consumers have ramped up their spending this year on the back of a strong labor market. We also expect slightly higher growth in disposable personal income during the upcoming holiday season compared with last year. Consumer confidence also remains elevated, despite some fluctuations in 2016. Additionally, households have been drawing down their savings, and therefore spending has been healthier than would normally be expected given the rate of income growth. While attention toward presidential elections may be a temporary distraction in the early part of the holiday shopping season, it should not have a negative impact on sales, and retailers may benefit from a pickup in postelection consumer spending."

"We anticipate that marketplace fragmentation – more than e-commerce – will be the major disruptor this holiday season."

Deloitte's retail and distribution practice expects total holiday sales to exceed $1 trillion, representing a 3.6-4% increase in November through January holiday sales (excluding motor vehicles and gasoline) over last year's shopping season. Additionally, Deloitte forecasts a 17-19% percent increase in e-commerce sales, reaching $96 to $98 billion during the 2016 holiday season.

"We anticipate that marketplace fragmentation – more than e-commerce – will be the major disruptor this holiday season," said Rod Sides, vice chairman, Deloitte LLP and U.S. retail and distribution sector leader.

"Retail competition will not only come from the big box down the street or major e-commerce players," Sides noted. "It is also likely to come from the small and midsized retailers that focus on niche products and experiences. This group has been collectively taking share from large, traditional retailers to the tune of $200 billion in annual sales over the last five years. The retailers that compete on differentiated products and experiences should be well positioned to outperform other competitors during the holiday season." 

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