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Joy to the World (of Retail)

As predicted by the vast majority of prognosticators, it was indeed a great holiday shopping season for retailers as sales increased by over 5% over last year (higher than estimates) to reach $850 billion. To say that the holidays aren't important to retailers is to fail to understand the American consumer. "The Holidays", a period that runs from November 1st to December 24th, are a big, fat, $850 billion deal for just about everybody.

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While more data will be revealed soon by a number of sources, Mastercard has released a report,"SpendingPulse", that reveals a healthy holiday appetite for goods and services among American consumers. For those retailers struggling to survive, this was good news and could buy several struggling players some more time to re-orient their brands and their business models. But many of these companies are so debt-ridden, it is hard to believe that they will be able to invest enough money in their brands to turn things around. Old brands die out and thus provide greater opportunities for new ones to thrive.

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Online sales continued to grow, up more than 19%, but it is crucial that we remember that e-commerce, after over 20 years,still represents less than 13% of total retail sales. The growth rate of a smaller category within a larger category is often naturally greater since it is easier for smaller numbers to grow; and although online's share of retail is climbing, it is doing so at a very slow and steady pace. I know, it doesn't seem that way does it? But brick-and-mortar retailers have overbuilt over the decades, taking advantage of cheap real estate in expanding suburbs, and they are now facing a great culling. Most brands are downsizing their brick-and-mortar footprints and some will eventually perish entirely, but e-commerce isn't taking over any time soon.

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Clothing was up almost 8% this year and furniture rose a healthy 2.3%. Electronics, whose charms are perhaps finally wearing on a gadget-saturated market, slipped by almost 1%. Far more people visited department store websites (up over 10%) than visited the stores themselves, but those numbers are skewed by the store closings mentioned above. It looks like even for department stores, 2018 was a good year. But what about next year?

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For marketers, 2019 is not expected to be nearly as profitable, as global growth slows dramatically, our stock market corrects itself following the longest bull market ever, trade disagreements raise costs and worry investors, and our economy moves closer to ending the longest expansion in its history. Indeed early 2020 might bring a small recession as consumers recover from spending during next year's holiday spree. In the Age of Amazon, marketers must prepare for economic eventualities of this nature, and it is during the more trying times that we will see some retailers finally run out of money and close their doors. Sears comes to mind. But for now, a healthy holiday season has energized and given joy to an otherwise beleaguered sector that suffers from overpopulation and a festering Amazon problem.