From Amazon To Wal-Mart, Retailers Gear Up For The Holidays

With the holiday season approaching, retailers are gearing up for the busiest part of the year and it goes without saying that competition will be tough, be at brick-and-mortar stores or online. Its a foregone conclusion that retail bellwethers will leave no stone unturned to make the most of the season that accounts for a sizeable chunk of yearly revenues and profits. They will sweep buyers off their feet with early-hour store openings, huge discounts, promotional strategies, and free shipping on online purchases.

However, the recent soft retail sales data for the month of August have somewhat subdued the fervor of retailers. Adding to the woes, is the recent cut in 2017 retail sales forecast by the National Retail Federation. Per the retail trade association, retail sales — excluding autos, gas and restaurant — are expected to jump in the band of 3.2-3.8% down from 3.7-4.2% projected previously.

Market experts asserted that while recent hurricanes resulted in short-term derailment in the economic activity, a lift in the later part of the year remains on the cards. However, they cautioned that a surge in gasoline prices will pinch the pockets of consumers who make bulk purchases during the holiday season. Nevertheless, improving labor market, rising disposable income and elevated consumer confidence indicate sturdy sales during this shopping season.

According to Deloitte, sales during the holiday season are likely to go up as much as 4.5%, while e-commerce sales are envisioned to improve 18-21%. The data unveiled by Kantar suggests that sales during the fourth-quarter holiday period is expected to jump 3.7%. Data compiled by eMarketer forecasts 3.1% jump in holiday sales (November and December) to $923.15 billion, while retail e-commerce holiday season sales are anticipated to rise 16.6%.

Retailers Taking E-Route

The retail landscape has been undergoing a fundamental change, with technology playing a major role and the focus shifting to online shopping. This transition in shopping pattern is compelling retailers to rapidly adapt to the changes in the ecosystem. Retailers now have no option left but to keep pace with the changing retail scenario or get eliminated. They are now focusing more on enhancing omni-channel capabilities, optimizing store fleet and restructuring activities. Amazon.com Inc. (NASDAQ:AMZN) has been in the spotlight for the last few years, as changing customer patterns made the retail industry more dependent on e-commerce.

Amazon’s recent takeover of Whole Foods Market (NASDAQ:WFM) sent shivers down major grocery retailers. Analysts are looking at this acquisition as an amalgamation between online marketplace and physical stores. The deal gave Amazon an easy access to roughly 400 plus stores and a foothold in the grocery business. The e-commerce giant acquired online retail platform Souq.com to tap the Middle East market and entered the Chinese market with the buyout of Joyo.com, an online retailer of music, books, videos and DVDs. Further, NIKE Inc.’s (NYSE:NKE) plans to sell directly through Amazon raised concerns for other sporting goods retailers. Sears Holdings entered into an accord to sell Kenmore-branded appliances on Amazon’s platform.

Wal-Mart Stores Inc. (NYSE:WMT) is also making huge investments in e-commerce initiatives. The company’s acquisitions of ShoeBuy, Moosejaw, ModCloth and Jet.com fall in line with its quest to build an impressive digital brand portfolio. The company partnered with Alphabet’s Google (NASDAQ:GOOGL) to enable shopping through Google Express using voice-activated service. Target Corporation (NYSE:TGT) has been also focusing on developing its online business. Recently, it waged war against other retail big-wigs by aggressively cutting prices on a range of items.

Hiring on Track to Meet the Holiday Rush

Retailers such as Macy’s, Inc. (NYSE:M) , Target, The Gap, Inc. (NYSE:GPS) have announced hiring plans for the upcoming holiday season as they expect higher store traffic based on renewed consumer confidence.

Per media reports, Target intends to employ 100,000 associates, while Macy's will hire nearly 80,000 seasonal workers to handle the rush. Meanwhile, Gap has begun inviting applications for seasonal associate positions at all stores including Gap, Gap Outlet, Banana Republic, Banana Republic Factory and Old Navy across the United States and Canada. Gap’s hiring events will be organized at all concerned stores on Sep 23, 2017. 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS) plans to hire about 8,000 associates nationwide for the season.

Be Hawk-Eyed on the Extra Miles

The holiday season is nothing less than a battlefield for the retailers fighting hard to win over consumers. Companies 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 with the advent of the holiday season, the retail sector will hog all the attention. So, how about betting your bucks on lucrative options? Out of the stocks mentioned above, Wal-Mart, Target, Macy's, Nike and Gap all carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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