Early forecasts for the holiday shopping season indicate sales and foot traffic will climb this year, with people spending more time in malls and visiting more stores — which could indicate more business for restaurants, say industry experts.
In one of the first forecasts for the season, Chicago-based retail analyst ShopperTrak predicted this week that national retail sales will increase 3.3 percent during November and December, compared to last year, and foot traffic will increase 2.8 percent.
That’s good news for restaurants, said Bonnie Riggs, restaurant analyst for market research firm The NPD Group.
“If stores have more foot traffic during the holiday shopping season, restaurants will benefit,” she said. “If shoppers are out and about going in and out of stores, they’ll make time to stop for a meal or snack at a restaurant. Having a nice meal at a restaurant is, for many, a part of the holiday shopping tradition.”
ShopperTrak’s forecast is slightly more optimistic than one expected out the week of Sept. 24 from the International Council of Shopping Centers, or ICSC. In a preview, officials said ICSC is predicting general retail sales to rise 3 percent this year during the holidays.
ICSC’s forecast this year encompasses October, November and December, given that several major retailers are planning to launch Christmas holiday promotions even before Halloween in a trend called “Christmas Creep.”
While neither forecast includes restaurants, general retail activity is typically an important indicator for the foodservice industry, which is hoping to capture hungry shoppers out for a bite to eat.
The 2011 holiday season proved to be a good one for restaurants, in part because of mild weather in most parts of the country. Industry-wide same-store sales rose 5.4 percent last December over the prior year, a jump from the 2.9-percent year-over-year increase seen in November 2011, according to the NRN-MillerPulse Survey.
Darren Tristano, executive vice president of market research firm Technomic Inc., predicted this year’s holiday season will be even better for restaurants. Consumer confidence is up and unemployment rates have stabilized, he said.
“People shopping more is going to lead to more restaurant occasions,” he said. “Projections of foot traffic being up will definitely increase the likelihood of increased sales for restaurants.”
ShopperTrak’s forecast indicated that retailers have seen sales growth over the past two years, with year-over-year increases in 34 of the past 35 months. This year’s expected growth in foot traffic, however, will be a turnaround after five years of negative trends. Last year, foot traffic declined 2.2 percent over the prior year.
Ed Marcheselli, ShopperTrak’s chief marketing officer, said the expected increase in foot traffic doesn’t necessarily mean more consumers will be out shopping.
“What we’re seeing is that people are visiting more stores, and overall they’re spending more time shopping,” he said. “That’s an opportunity for restaurants to capture lunch and dinner business.”
However, ShopperTrak is not predicting that consumers will buy more this season, in part because of results from this year’s back-to-school shopping season in August.
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While foot traffic rose a whopping 11.1 percent in August, according to ShopperTrak, actual retail sales increased a disappointing 0.9 percent, according to the U.S. Department of Commerce. “You’d think that 11-percent traffic growth would have driven even higher revenue growth, but that didn’t happen,” said Marcheselli. As a result, ShopperTrak’s forecast is “guardedly positive” for the end-of-year holidays, he said.
“We see people returning to malls and going to more stores, but there’s still a lot of economic uncertainty in general,” Marcheselli said, adding that this year’s election will also likely dampen the impact of retail marketing efforts in October.
In the past, national elections tend to delay shopping activity, according to ShopperTrak. In 2008, for example, shopping activity dropped about 6.3 percent during the week before election day — though that year was also when consumer confidence was at its lowest as a result of the recession.
However, Marcheselli said, “Political advertising tends to suck all the oxygen and makes it difficult for retailers to get their message out.”
The good news: Shopping also tends to rebound quickly after Election Day, ShopperTrak indicated. “Consumers who were distracted during the election, however, generally dive into the holiday shopping season after the ballots are counted,” the report said. “Store managers must have their marketing and advertising ready to go on Nov. 7 to capture the full sales potential of this holiday season.”
Holiday timing boosts promotions
This year there will be 32 days between Black Friday, the day after Thanksgiving, and Christmas: the longest interval possible. The period will also include two extra weekends — including one between Christmas and New Year’s Eve, when retail stores tend to be particularly crowded.
Hanukkah also falls 11 days earlier than last year, allowing retailers an opportunity to boost sales earlier in the season, the ShopperTrak forecast said.
Last year, a number of major retail chains, including Walmart, Toys R Us, Target, Best Buy, Kohl’s and Macy’s, opened their stores at midnight on Black Friday or even earlier on Thanksgiving evening, and industry observers expect that trend to increase this year.
According to the National Retail Federation, a record 226 million consumers shopped during last year’s Black Friday weekend, spending an average of $398.62, compared with $365.34 the prior year.
ShopperTrak estimated that shoppers spent $11.4 billion on the Friday after Thanksgiving alone, indicating a 7-percent year-over-year increase in sales that day and a 5.1 percent increase in foot traffic – boosted in part by the earlier openings.
Fred LeFranc, founding partner of consulting group Results Thru Strategy, said it remains to be seen which segments within the restaurant industry might benefit most from the shopping crowd.
“If consumers are feeling confident, then casual dining will do better as they will treat themselves to a meal as long as they are out,” he said. “If not, they may be more frugal and grab a quick bite at a QSR or fast casual.”