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Holiday Spending Expected To Rise In 2016

Michael Spooneybarger/CREO
Heather Cook visiting from Washington shops at the Belle Ame' Bath & Body in downtown Tuesday, November 29, 2016 in Pensacola, Florida.

The Holiday shopping season is officially underway and economists are predicting an increase of 3.6 percent in spending this year. John Hartman, a research scientist with UWF’s Haas Center, said there are many factors contributing to this year’s crowded stores.

Credit Michael Spooneybarger/CREO
Veronica Cook and her mother Heather Cook visiting from Washington shop at the Belle Ame' Bath & Body in downtown Tuesday, November 29, 2016 in Pensacola, Florida.

“Unemployment is low, especially in the state of Florida. We see disposable income is up; our labor force participation rate is higher than it’s been last year,” Hartman said. “Everything is looking really good, especially with Florida we’re seeing this job growth that’s been sustained for the past couple of years.”

Consumers also seem to have much better control over their personal debt which is also fueling more spending.

“In 2008, I think it (debt) was up to around 13 percent and right now, we’re seeing these household debt payments are down to around 9 percent. So, people are having more disposable income to spend on things. And so that’s one of the things they’re choosing – to spend on more consumable items,” Hartman said.

For the first time, online shopping and in-store shopping will be virtually equal and Hartman believes that this change is fueling stores to change their strategies.

“It’s causing people like Wal-Mart and Target to also beef up their online presence,” Hartman said. “Wal-Mart just bought (online retailers) Jet.com trying to compete with Amazon and is now offering free grocery pickup so you can place all your orders online. Target is offering free shipping on almost everything online for the past month.”

Convenience seems to be driving much of the change, Hartman said.

“Overall with this online shopping growth, what we see is this ease of access. When you go shopping, you’re already checking your phone for reviews and things like that on Amazon or Google,” he said. “So if you see a lower price online then you do in the stores, then you might as well buy it right then online if you can get free shipping.”

While high-end stores are still thriving, some lower-tier stores are struggling to survive.

“What we’re seeing is a move towards experience-based shopping. We’re still seeing a lot of people going out to the high-end malls to see and be seen there,” Hartman said. “It’s really the lower end places that are suffering. That’s where we’re seeing less growth from those areas.”

Stores have also extended their holiday sales and hours over recent years, with many stores opening on Thanksgiving Day. But Hartman said retailers are now experiencing a backlash against that strategy.

“There’s some stigma against the stores who are forcing their employees to work on Thanksgiving Day,” he said. “Most of the stores are becoming less participant on Thanksgiving Day.”

Overall, Hartman said, holiday shopping is going to mean big business for retailers this year.

“I do think we are going to see positive growth. Some people are predicting as high as 10 or 11 percent growth,” he said. “I don’t know that it is going to get that high, but I do think we are going to see some growth over last year.”

This article is part of a collaboration between WUWF and the UWF Center for Research and Economic Opportunity.