Retail Poised To Perform In 2017

News & Publications
Retail Perspectives - 2017 Forecast

Last year – 2016 – got off to a rocky start with declines in the U.S. stock markets and problems with the Chinese economy raising concerns about the strength of our own economy and, in particular, the retail sector.  However, as we now know, the stock markets were not only able to rebound, but also thrive, and the world economies were able to work through glitches to make 2016 a positive year for the American economy, including the American retail sector.

Throughout 2016, the core fundamentals necessary to continued retail growth seemed to be reinforced and bolstered.  Unemployment continued to decline, the cost of capital (interest rates) remained low, consumer confidence continued to rise, inflation remained low, fuel costs continued to remain low and discretionary spending continued to remain high.  Many believe that not only have these fundamentals taken root and have grown, but they have flourished, and retail is no longer in recovery or rebound mode but is in full growth mode.

The end of the year brought the mostly unexpected election of Donald Trump as the next President of the United States.  Although many commentators expected a substantial dip in the economy in the immediate aftermath of Trump’s election, the exact opposite occurred.  Following the election, the stock market increased and many economic indicators pointed in a positive direction.  In fact, as of this writing, the Dow Industrial Average on the New York Stock Exchange is “toying” with reaching 20,000 points for the first time in history.  In addition, the overall U.S. economy has continued to flourish following the election – a result some find as surprising as the results of the election.  It remains to be seen whether this positivity can be sustained into 2017. 

Holiday Sales as an Indicator of Growth Going Forward

As we have indicated in past articles, prior performance of the economy and prior holiday sales performance is often an indicator of upcoming retail performance in the ensuing year.  In addition, because of the changing nature of the holiday buying season and the expansion of Black Friday weekend (taking into account Thanksgiving Thursday and Cyber Monday), and the inclusion of e-commerce transactions, holiday season statistics are no longer measured by Black Friday alone, but rather over the whole holiday season from Thanksgiving through December.

Leading into the holiday sales period the economic news was mostly positive.  According to a recent National Real Estate Investor publication, “Gross Domestic Product rose at a 3.5 percent annualized rate in the three months ended in September, compared with a prior estimate of 3.2 percent, Commerce Department figures showed.”  According to a related article, “[t]hird quarter real GDP was reported at its fastest growth rate since the third quarter of 2014. … The unemployment rate continued to dip and employment continued to grow.  Consumer confidence continues to get better and personal incomes continue to grow.  The manufacturing sector continues to improve along with corporate profits.  Auto and light trucks remained high.  Over all this is a great respite from the slow rate of growth that had been the norm in this recovery and indicates that the economy is doing well.”

Similarly, holiday sales growth exceeded expectations.  According to a recent Shopping Centers Today article, “[h]oliday spending rose by 16 percent over the 2015 season, beating predictions by 4 percent, according to a consumer survey conducted on behalf of ICSC Research.”  This figure appears to relate to personal consumer spending.

Many reports and analyses forecasted moderate growth for the 2016 holiday period. November saw moderate growth.  This was largely due to the slightly sluggish start to Black Friday weekend, resulting from bargain hunter consumers waiting for better deals later in the holiday season and discounted items over the Black Friday weekend.  During the recession, discount savvy consumers learned to wait-out retailers early in the season in order to get better prices during the later holiday period.  In the end, the 2016 holiday season turned out very well and consumers got what they wanted, as many of them appeared to delay purchases to take advantage of better deals.  According to a recent Retail Newsline article by Cushman & Wakefield, “overall holiday sales were up 3.8 percent to 196.1 billion in 2016 – the largest increase since 2011.  Our forecast (released in October) was for 3.7 percent growth.”  This type of momentum bodes well going into 2017.

Consumer Confidence

According to a recent U.S.A. Today article, “[c]onsumer confidence soared to a nine-year high in November despite Donald Trump’s upset victory in the presidential election, which was expected to intensify political uncertainty and roil markets.  A closely watched index of Americans’ outlook increased to 107.1 from an upwardly revised 100.8 in October as their views of both current conditions and the next six months improved significantly, the Conference Board said…. That’s the highest level since July 2007, five months before the Great Recession began.”

Similarly, according to Tom McGee, ICSC’s President and CEO, “[c]onsumer confidence continued to improve into December, and we saw this optimism reflected in the holiday spending numbers. … The strong holiday shopping season suggests a positive environment for retail sales overall.”

Consumer confidence is a fundamental factor in any economic forecast.  With high levels of consumer confidence, coupled with low unemployment and other positive economic factors (such as the recently increasing stock market, the continued low interest rate environment, increasing wages and low fuel costs), the indicators look good for a continuing positive retail sector.


Notwithstanding the expected continued growth in retail, certain segments of the retail sector have experienced difficulty.  Just in the past few weeks, Macy’s and Sears announced significant store closures.  Other retailers that are less able to evolve quickly will also likely close stores in the near future.

It appears that many online retailers and e-commerce retailers are performing well.  Many of the more successful brick and mortar retailers have adapted by competing in both domains – the shopping center and e-world.  Therefore, retailers with a good omni-channel presence are best able to survive and flourish.  Many of these types of retailers are typically taking smaller footprints at shopping centers and providing more e-commerce services to their customers.

In addition, we are seeing more experiential types of operators replace traditional retail operators in brick and mortar spaces.  Thus, we are seeing more restaurants in retail centers, but also more theatres, fitness and health clubs, and other types of uses that cannot be duplicated online.


According to various recent reports, the latest Fitch Ratings Outlook “projects U.S. retail sales, excluding automobiles and gasoline, will grow 3% to 4% in 2017, which is in line with the 3.8% forecasted for 2016 due to a generally consistent economic backdrop. … Facing a shift in customer shopping habits and attitudes toward discretionary expenditures, many retailers have responded by moving to omnichannel models that holistically serve the customer across their online and bricks and mortar presence.”

Provided the fundamentals that took root following the Great Recession remain intact, and provided that retail does not experience too many major surprises, given the momentum coming out of 2016, the Fitch forecast certainly seems to be a reasonable prognosis for 2017.

*     *     *

2017 has all of the makings for another positive year in retail.  Unemployment and interest rates remain low.  The overall economy remains strong and the stock market is up.  Consumer confidence is high.  The core fundamentals appear strong.  However, this is tempered by an element of uncertainty surrounding the incoming President and how his and the Republican majority’s agenda will affect the economy.  Should things remain on track, 2017 should be a good year for retail.

Related Professionals

Related Practice Areas

Jump to Page

By using this site, you agree to our updated Privacy Policy and our Terms of Use.