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Do Retailers Need to Be Hawk-Eyed This Holiday Season?

With the holiday season coming up, competition will surely be tough, whether at brick-and-mortar stores or online, and retailers need to be hawk-eyed to make the most of it. It goes without saying that retailers are gearing up for the holiday season so that they can better serve their patrons.

The holiday season is the time when retailers are well on their toes, flooding the markets with offers and promotions. They will sweep buyers off their feet with early-hour store openings, huge discounts, promotional strategies, and free shipping on online purchases. Since the season accounts for a sizeable chunk of yearly revenues and profits, retailers will grab every opportunity to drive footfall.

The Sector Holds Promise

Retailers are efficiently allocating a large chunk of their capital toward a multi-channel growth strategy focused on improving merchandise offerings, developing IT infrastructure to enhance the web and mobile experience of customers, renovating stores with a modern look, developing fulfillment centers to enable speedy delivery, implementing an enterprise-wide inventory management system as well as enhancing their relationship with existing and new customers.

Given the rebounding U.S. economy, the retail space is brimming with optimism, and retailers will leave no stone unturned to make the most of the season. A gradual recovery in the housing market and manufacturing sector, along with an improving labor market and lower gasoline prices, are favoring the economy and playing key roles in raising buyers' confidence. We expect this positive sentiment to propel consumer spending.

With the ability and willingness among consumers to spend more, retailers could hear their cash registers jingle this time. Data compiled by eMarketer suggests a 5.7% jump in holiday sales (November and December) to $885.7 billion against 3.2% growth projected earlier. Retail E-commerce holiday season sales are anticipated to increase 13.9%, and would represent approximately 9% of total sales this season (or $79.4 billion), up from 8.3% last year.

Hiring on Track to Meet the Holiday Rush

Retail giants such as Macy's, Inc.M , Target Corp.TGT , Wal-Mart Stores Inc.WMT and Kohl's Corp.KSS have also announced their hiring plans for the upcoming holiday season as they expect increasing store traffic, based on regained consumer confidence.

Macy's plans to hire roughly 85,000 seasonal employees to fill the positions at its Macy's and Bloomingdale's outlets, call centers, distribution centers and online fulfillment centers. Kohl's plans to deploy over 69,000 associates this season for its 1,166 stores compared with 67,000 workers appointed last year. On the other hand, Wal-Mart intends to add 60,000 heads to its seasonal workforce to better equip itself for the season, while Toys "R" Us Inc. plans to increase its seasonal headcount by 40,000 this year against 45,000 last year.

Per media reports, Target plans to employ 70,000 associates to tackle the busiest season of the year. Moreover, the escalating online competition prompted this general merchandise retailer to align its price-matching policy with its rivals, effective today which now includes 29 retailers, up from 5 previously. Some of the big names with which customers will be able to price match comprise Wal-Mart, Amazon.com Inc.AMZN , Best BuyCo., Inc.BBY , and even wholesale giant, Costco Wholesale Corp.COST .

Be Hawk-Eyed on the Extra Miles

The holiday season is no less a battlefield for the retailers fighting hard to win over consumers. Retailers will go the extra mile - offering discounts or indulging in promotional activities - to trap the bargain hunters. But we wonder whether these will come at the price of margins, not to say the impact on the bottom line.

We believe that retailers should be cautious and diligent this time, given the turbulence in the global financial market which may affect consumer sentiment and downplay economic growth. Going by the pulse of the economy, we could see more competitive pricing and new products to attract shoppers this holiday season. We believe that retail companies will move heaven and earth to win the hearts of shoppers, and it definitely remains a wait-and-watch story as to who emerges successful.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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