Negative expectations about retail are not unfounded. With the growing trade war, volatile stock market, and effects of the shutdown, it seems that we should expect a slump in retail sales for 2019. As it turns out, retail sales are predicted to increase by approximately four percent to top $3.8 trillion in 2019, a surprisingly high percentage considering the aforementioned economic situation. Although this implies that the sales are decelerating in growth, the projected slight drop is still in accordance to the fluctuations of the past decade.
The steady growth of sales may potentially be due to retailers anticipating effects of the trade war and dodging them, though they are unlikely to continue avoiding costs in the long term. Unless the tariffs are lifted, there is fear of a potential recession. Another possible factor is the growth of the e-commerce sector. US online shoppers spent a whopping 126 billion US dollars during the holiday season. Luxury brands such as Louis Vuitton, Chanel, and Prada have been receiving high returns after recently fully embracing digital commerce. Once selling only safer products such as perfume or accessories, high end brands have been responding to increased demand by selling apparel online. Additionally, nearly half of fashion sales come from footwear, being the most frequently purchased luxury good. Its frequency has continues to rise 1.6 times per year.
The e-commerce sector has also seen a dramatic increase in men’s shopping online and on physical stores, with growth outpacing that of women’s wear. The menswear still remains half the size of the womenswear market. Growth in high end fashion, however, is not representative of the state of retail as a whole. In a study by the BDO that interviewed a pool of over 3,000 executives, 54% of retail executives claim that their companies are just breaking even. 9% claim that they are struggling.
Although the current state of the economy may be sound, it is difficult to gauge the future of retail.