• Maureen Azzato

Analysts: Trump’s Win Could Tamp Home and Retail Sales

Consumer paralysis and higher labor costs likely on tap

Donald TrumpNEW YORK - While Donald Trump’s election clearly shook the international and futures’ markets to the core last night, calm seems to be prevailing today after one of the biggest election upsets in U.S. history.

As all the implications of this historic election unfold, the retail industry has to wonder what the implications will be for short-term and long-term sales. How will this affect consumer confidence? What will the holiday season be like now? How will house/real estate sales and other big-ticket items be affected? And what are the subsequent implications for home furnishings retailers and manufacturers?

Retail analyst David Naumann is fairly positive about the near term, but expressed concerned about large-ticket item sales. “Despite all the economic uncertainty with the president-elect, Donald Trump, U.S. consumers are doing fairly well from an income and employment perspective,” said Naumann, vice president of marketing for Boston Retail Partners. “While the outcome of the election was a shock to most of the nation (good or bad), most consumers will probably not let it influence their purchase decisions during the holidays or other general purchases, including home retail sales.

“The only categories that may be impacted by consumer sentiment from the election are purchases that require a long-term investment, like autos and real estate,” he added.

The National Retail Federation is standing by its November and December 2016 sales forecast to increase 3.6 percent year-over-year, “which is pretty optimistic. Let’s hope they’re right,” Naumann said.

Cristina Fernandez, a senior analyst with Telsey Advisory Group, said a Trump win “adds a layer of uncertainty for the consumer and holiday sales could be under some pressure.” But Trump’s focus on “lower taxes for more affluent consumers could support continued spending on the home over the next several years, benefiting companies like Costco, Ethan Allen, Home Depot, Lowe’s, RH and Williams-Sonoma.” Uncertainty, however, prevails. “On the other hand, it could pressure middle-income class-oriented retailers like Bed Bath & Beyond and Target.”

Forbes contributor Richard Kestenbaum of Triangle Capital LLC, said he sees consumer “paralysis” and “higher costs” ahead for retailers.

“The markets hate surprises and consumers do, too. Large purchases, like homes and autos, will stall,” he wrote. “No one will want to make important, major purchases in the immediate follow-up to this election. Smaller purchases will also decline in the short-term as consumers hold back for fear of how to handle the election on a personal basis.”

Kestenbaum added that the election will likely have an inflationary on labor and imported products. “That means operating retail stores will become more expensive and consumer products, particularly those imported, will be under pressure to increase prices when there is more pressure for tariffs on imports and less labor to load, move and sell consumer products.”

Retailers like Amazon and Walmart that rely on technology to curb labor costs are better positioned to make it through the financial disruptions of a Trump election, Kestenbaum noted.

Maureen AzzatoMaureen Azzato | Publisher & Editorial Director

 Maureen Azzato is responsible for all editorial and content management, strategic planning, sales and brand marketing for HFN. Azzato is a 25-year media veteran who has been involved in business-to-business publishing, brand development and marketing communications for her entire career.

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