Based on 2017 Numbers, 2018 Retail Sales Are Set to Increase

As Mark Twain once quipped, “The reports of my death have been greatly exaggerated.” This is also true regarding the death of traditional brick and mortar retail facilities known as shopping centers. Despite the growth of online shopping, Frank Bullock, Henry S. Miller Executive Vice President of Retail, anticipates that 2018 retail sales will be even more robust than in 2017. Here’s what he has to say.

Numbers Are Up Across the Board in 2017

As year-to-year comparable sales reports flow in from all categories of the retail sector—discounters, specialty, luxury, hard goods, restaurant and entertainment—we see that all categories were up a little over 3% in 2017 from 2016. Retail sales exceeded the 2016 Christmas sales by 3 to 3.5%, which is a significant increase in gross sales dollars. Big box discount stores such as Target, Wal-Mart and Kohl’s experienced this growth and so did luxury jeweler Tiffany with a 3% year-to-year increase.

Where the Shoppers Shop

According to a post-Christmas survey conducted by the International Council of Shopping Centers, 95% of the respondents bought merchandise from brick and mortar stores.

The big merchandise winner was apparel and footwear with 48% of shoppers purchasing in this category, followed by non-electronic toys and games at 37%. Electronics and digital services garnered 30%, and household appliances, home goods and furniture came in at 24%.

However, the most popular gift was the gift card with 68% of shoppers purchasing at least one. The average amount for a gift card this season was $128.00, nearly $40 more than the 2016 shopping season.

Retailers and landlords both agree that gift cards are the gift that keeps on giving. One’s generational classification seems to determine when the cards will be redeemed. Consumers in Generations X and Y tend to redeem their cards more quickly than those of the Baby Boomer and Silent Generations. Historically when a gift card is redeemed, shoppers will purchase additional merchandise or services while shopping. Therefore, a retail sales multiplier effect comes into play with every purchase of a gift card.

Personal Observations on Christmas Shopping in 2017

On a personal note, as my wife and I were travelling from Dallas to Jackson, Mississippi on Saturday December 23rd to have Christmas with our family, we observed this sales mania at four different malls.

First, upon leaving Dallas, we passed Town East Mall in Mesquite, Texas. Here, we experienced a 30-minute traffic jam at Interstate 635 and Town East Boulevard as shoppers streamed to the intersection that is full of every conceivable retailer.

Two and a half hours later at the Bossier City Mall in Shreveport, Louisiana, the same traffic jam with parking lots packed to capacity slowed our travel. Ninety miles farther east in Monroe, the Pecan Land Mall and associated power center were likewise packed to the gills with cars and shoppers spending money.

We finally arrived in Madison—a northern suburb of Jackson—six hours later. Once again we found that the Renaissance at Colony Park, the largest lifestyle center in Mississippi, was also extremely crowded. Although not a scientific poll, these four shopping Meccas in diverse demographic locations were all doing a land-office business.

Thus, all indications are that we had a most successful Christmas retailing season, which sets the stage for a brisk Q1 2018 and in my opinion an even better 2018 Christmas season.

The information contained in this article is general in nature and should not be construed as financial, tax or legal advice.  As with any financial or legal matter, consult your tax advisor and legal counsel.