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BizReport : Ecommerce archives : June 21, 2016

How consumer spending increase could impact future sales

With consumer spending showing it's strongest growth in several years in May, many merchants are hoping to see that translate into increase back to school and even holiday spending. One expert offers his advice.

by Kristina Knight

"Mass producing enough supplies for millions of school-goers and then distributing to thousands of retailers requires intense planning and preparation. Manufacturers who meet the needs of their retailers will take a look at the data and try to figure out how this growth in spending will ultimately trickle up to them, and retailers pre-season orders are driving that process," said Mike Elmgreen, CMO, Handshake.

Elmgreen points out the manufacturing processes have begun for many, so the increase in May spending may not impact pre-orders, but if spending continues to grow, merchants should make adjustments to their order making.

"This report in a vacuum will not affect planning for the holiday season, but if retailers see the consumer picking up steam over the next several months they may place larger pre-book orders from their suppliers than would have been expected at the start of the year," said Elmgreen.

As to how merchants might begin tweaking holiday plans, he says merchants need to focus on where consumers are spending more, and how that might translate to their store.

"A 1% change is a great movement, but if a lot of that new growth came from buying automobiles, a stationery retailer, online or offline, won't necessarily adjust their strategy if their sales are consistent with expectations. Ultimately, if merchants see an uptick in their own business and the economy has a whole remains strong, they'll respond. As a result, manufacturers will need to be flexible and work with retailers to respond to changing consumer demand. The economy seems headed in the right direction, but a lot of speed bumps remain. Everyone is waiting to see how resilient the U.S. consumer will be for the rest of the year," said Elmgreen.

Tags: consumer spending, ecommerce, Handshake, retail trends

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