Shoppers use this holiday season, but it cannot last

Dealers are preparing for the latest sprint of holiday shopping as a warning sign flashes around 2019.

Data from Adobe Analytics and the National Retail Federation signal a strong holiday shopping stretch so far. But investors are nervous about risk, including trade war between the US and China and wider uncertainty about Washington's trade policy, as well as a slowdown in key foreign markets.

Shares of dealers such as Target, Costco, Kohl, Nordstrom and Tiffany have fallen sharply in recent weeks as costs rise, and Wall Street questions their ability to navigate late in the economic growth cycle.

"Weaknesses in retail trade and volatility have unfortunately been relentless," said Cowen analyst Oliver Chen in a research report Friday. S & P 500's sales index has been more than 20 percent over the past three months.

Healthy consumers and new ways to shop

For now, Americans buy everything from TV to toys to clothes. Consumer confidence is high and wages are picking up.

Retail sales in November increased by 4.2 percent from the previous year, according to the latest data from the Commerce Department.

Online growth has continued at a rapid pace. The Americans have used a record $ 1[ads1]10 billion online since November 1, nearly 18 percent increase over the same period a year ago, Adobe Analytics said on Thursday.

Nintendo switches, LG and Samsung TV, iPads, Four TVs and Roku devices, headphones and LOL Surprise dolls have been some of the best sellers, according to Adobe.

On the last Saturday before Christmas, Americans were estimated to spend $ 26 billion – more than they spent on both Black Friday and the same Saturday last year, retail consulting client growth partners estimated.

"Consumer spending remains solid and clearly proves that the economy is healthy when we enter 2019," said Prime Minister Jack Kleinhenz, previous detail. NRF projects vacation spending will rise by up to 4.8 percent compared to a year ago. [19659004] A timely decline in gas prices will curb spending on Saturday, gas prices have fallen 54 cents per gallon since the peak of October, the national gas prices averaging $ 2.33 per gallon, according to AAA data, in two states, Missouri and South Carolina , the price of a gallon has fallen below $ 2.

"If you save a few bucks on the pump every time, it can make a real difference," said Craig Johnson, president of the customer's growth partners.

Dollar General and Dollar Tree is ready to take advantage of extra money in the customer's wallets, and more than four out of 10 consumers say they plan to shop in a dollar store during the holidays, according to a new report from the market research firm NPD Group.

aljists also met customers in new ways.

Walmart and Target are investing in tools to speed up shop lines and roll out online retrieval at thousands of stores. Amazon offers free shipping on all holiday orders for the first time, a sign that the brick shops are beginning to inflict more pressure.

"Retail is a business where the bar is being raised, and there is increasing differentiation between the winners and the losers," said Best Buy CEO Hubert Joly "to CNN Business in an interview this week. Best Buy, like other rivals, has retrieved the business from Sears & collapse and Toys R Us bankruptcy.

Retailers who can offer the simplest shopping experiences in the stores will be the winners this year, said Taylor Schreiner, director of Adobe Digital Insights. Old Navy works with Lyft to offer customers free rides to online pickup stores on Saturday

Changes to the tax code from Congress's 2017 tax base could give a shot to spend early next year.

UBS analysts estimate that tax reimbursement checks will be up to 25 percent higher than a year ago, increasing up to 6 percent to retail from February to April, raising Dollar General, Walmart, Ross Stores and Fo ot Locker.

Darkening forecast

Despite the favorable terrain today, the background has changed for retailers. [19659004] Federal Reserve leader Jay Powell said on Wednesday that the Fed had "seen developments that may signal some softening" in global growth.

Cracks have emerged in China, where trade war with the United States has harmed the country's economy. The dollar has strengthened against the yuan in recent months, making US products more expensive for Chinese consumers.

This week, the UK online retailer Asos broke 40 percent after announcing that a weak sale would ruin the result. Asos was considered one of the few bright spots in the UK, where many dealers have found difficulty in dealing with Brexit uncertainty.

Consumer confidence in the UK has dropped to five years low.

FedEx spooked the market on Wednesday when it said the international business, especially in Europe, has weakened significantly over the past three months.

Warnings about international challenges are not the only factor that pulls down retail maps.

Wall Street is skeptical that companies like Costco and Target can maintain their strong traffic and sales performance next year.

"The investors question whether this is as good as it gets," Chen said from Cowen.

Retail sales may be up, but profit margins are down from major investments in stores, digital infrastructure, employee salaries, and transportation costs. Target offers free shipping on all orders during the holiday, which can weigh on profits.

Costco's share has fallen 13 percent over the past five days after it saw stronger competition in the grocery industry pushing margins. Target has fallen almost 30 percent over the past three months to return its gains this year, while TJX – the parent company of TJ Maxx, Marshalls and HomeGoods – is 22 percent.

Tariffs are another concern.

In September, the Trump administration announced a 10 percent tariff of $ 200 billion of imports. These tariffs were slated to rise to 25 percent on January 1, but the US and China have agreed to a temporary ceasefire.

Nevertheless, investors are concerned about higher rates on clothing, sneakers, home furnishings and consumer electronics. 19659004] Tarrifs has disturbed retailer supply chains, and companies have raced to bring in products from China before tariff chunks.

If the trade war with China escalates, the dealers may be forced to hike the prices. Someone like Walmart and Amazon will be in a better position to negotiate as they can push suppliers at lower prices.

Rising interest rates can also put the brakes on consumers, who have to pay more for mortgages and car loans.

Michelle Grant, general manager of Euromonitor International, said that tariffs and higher interest rates pose a greater threat to consumers than a wobble stock market.

"While the stock market is in turmoil, it has not yet led to changes in the real economy," she said. "Ownership is not widely spread in the United States."

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