Expect holiday deals from challenged retailers

The outlook for the busiest shopping days of the year will be challenging for most retailers, who are facing aggressive competition and still-cautious shoppers, say BMO analysts.

Similar to last year, American consumer spending should continue to grow at a modest 2% pace this holiday season, says Sal Guatieri, BMO’s senior economist.

Read: Walmart cuts sales outlook

While household finances are much improved from a year ago, amid rising equity and home prices, employment growth remains moderate, unemployment is still elevated and consumer confidence has been undermined by fiscal policy uncertainty, he notes.

So expect in-store discounts, he says.

Read: Holiday shoppers to spend more without adding debt

“The retail apparel holiday shopping season is always promotional — but this year the flood gates are open and we anticipate a promotional battlefield,” says John D. Morris, BMO’s retail apparel analyst.

Weak back-to-school shopping numbers and the U.S. government shutdown have led to lower mall traffic so far and stores have a lot of pent-up merchandise, he says. There has also been a shift in consumer spending from clothes to bigger-ticket items.

There are also fewer days in the 2013 holiday shopping season, he says. There’s 26 shopping days between Thanksgiving and Christmas compared to a record long season in 2012, which had 32 days.

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Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.