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The business case against Scrooge

The business case against Scrooge

“Bah humbug,” said a wretched Ebenezer Scrooge in A Christmas Carol, but perhaps he was the one businessman who couldn’t see the window of opportunity in holiday shopping.

This year, U.S. retail sales are expected to increase 3.6% over the months of November and December.1 That would put total store sales at $655.8 billion. It seems despite all the rumblings of a contentious presidential election, ongoing interest-rate debates and concerns about economic recovery, Americans are still spending.

The increased shopping is also good news for the U.S. holiday job market. Retailers are forecasted to hire between 640,000 to 690,000 seasonal workers this year. In 2015, retailers employed 675,300 people for the holidays. All the foot traffic should give urban property owners something to be thankful about.

Ghost of holiday future

It wouldn’t be in the seasonal spirit of giving to exclude other parts of the world. Not everyone celebrates Christmas or Hanukkah or Kwanzaa, but there are holidays and festivals taking place globally towards the end of each calendar year.

For example, Mexico has its version of Christmas through Las Posadas, a re-enactment of the Christmas pilgrimage made by Mary and Joseph in search of lodging, where guests are given small gifts after visiting family and friends. Diwali, the annual Hindu festival of lights, also encourages gift-giving among loved ones.

The internet has helped blur cultural borders by making us aware of different cultures, which allows more people the chance to celebrate these holidays. In that same regard, borders could matter less and less to online shoppers. Internet sales also tend to get a good share of the holiday pie.

U.S. online sales are projected to grow between 7% and 10% this year to $117 billion. As more internet merchants offer international shipping, it may be even easier for consumers to look for that perfect holiday gift when purchasing online. The options would be global, and the shops are open 24/7.

Overall global cross-border online sales are expected to hit $1 trillion in 2020.2 In 2014, total sales were $230 billion, which means cross-border retail purchasing could more than quadruple.

Online shopping is the main driver of growth in European (and British) and North American retailing. Among eight countries: the UK, Germany, France, The Netherlands, Sweden, Italy, Poland and Spain, internet retailing is expected to grow 16.7% in 2016 and 15.7% in 2017.3

These forecasts may cheer on both the global online retailer industry and the logistics/shipping companies that are sending these overseas packages.

Cratchit family comes to town

There is, of course, more to the holidays than shopping. Whatever the tradition, celebrations are often a time for family and friends, and with that, a time for travel so everyone can be gathered in one place. In the U.S., travel isn’t only good for business; it can also be good for the citizen.

One out of every nine jobs in the U.S. depends on travel and tourism to thrive.4 This may be helping the American taxpayer. It turns out that each U.S. household would need to pay an extra $1,192 more in taxes if not the tax revenue that’s generated by travel and tourism.

The number of long-distance trips in the U.S. increases 23% during the holiday season, according to the Department of Transportation. More than 90% of them are road trips.

In the UK, holidays were the most popular reason for its residents to travel abroad last year.5 Spain and France were the top countries to visit overall.

Scrooge joins for dinner

What would the holidays be without a feast? Even the grumpiest of us could function better with some food in our stomachs. For many travellers, whenever they pack their bags throughout the year, much of their budget goes to food. Last year, U.S. travellers spent $235 billion on food, according to the U.S. Travel Association. Americans aren’t just feeding themselves.

This holiday season, 32% of people in Deloitte’s holiday survey said they plan to buy food/liquor as gift items. The number has been steadily increasing since 2011, when it was 27%. Restaurants and fast foods are among the top five channels in Deloitte’s department store category that could benefit the most from U.S. spending this holiday.

The holidays continue to bring people together, and across retail, travel and food, it looks to be a positive season for businesses. Such an expansive opportunity should give investors something to celebrate year-round.

Important Information

Foreign securities are more volatile, harder to price and less liquid than U.S. securities. They are subject to different accounting and regulatory standards, and political and economic risks. These risks may be enhanced in emerging markets countries.

Forecasts are offered as opinion and are not reflective of potential performance, are not guaranteed and actual events or results may differ materially.

Image credit: ZUMA Press, Inc. / Alamy Stock Photo

Ref: 23211-151116-1

1 U.S. holiday retail sales data: National Retail Foundation (NRF), 2016.

2 AliResearch – Accenture, Global Cross Border e-Commerce Market 2020, June 2015.

3 Centre for Retail Research, 2016.

4 U.S. Travel Association, U.S. Travel Answer Sheet, 2015.

5 UK Office for National Statistics, Travel trends, 2015.