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Subject: ECO

BMO Experts Expect Stellar Holiday Shopping Season Buoyed By E-Commerce


NEW YORK, Nov. 24, 2017 /PRNewswire/ - As Americans prepare for the biggest retail weekend of the year, BMO analysts and economists are forecasting a notably strong U.S. holiday shopping season. This year, shoppers will benefit from rising purchasing power and anticipated tax cuts, and toy sales will experience a fourth year of growth despite an overabundance of movie toys and general toy sale softness.

"There are a lot of reasons to be optimistic about holiday shopping this year, largely because American consumers are backed by strong demand fundamentals," said Sal Guatieri, Senior Economist, BMO Capital Markets. "With unemployment rates reaching 17-year lows, consumer confidence at 17-year highs and household wealth at record highs, we expect the 2017 season performance to be the best since 2014, with sales rising at a solid four percent annual rate."

Looking forward, BMO experts expect continued challenges for traditional brick-and-mortar retailers, but also see significant opportunities as e-commerce players leverage technology to improve service and reduce prices.

"Amazon has been a retail disruptor and a major driver of the growth of e-commerce in the United States," said Dan Salmon, Analyst, BMO Capital Markets. "Shopping through Amazon has increasingly become the preference for many Americans, as the company utilizes artificial intelligence and other technologies to improve logistics and keep prices competitive. With strong quarterly growth in the sector, continued increase in Prime memberships and perks, the outlook for this e-commerce giant is strong."

E-commerce across the United States, in general, is in the midst of a strong year, growing at a steady annual rate of around 15 percent.

"As e-commerce continues to grow faster than traditional retail sales, we will see positive implications for industries such as packaging, shipping and warehousing," said Mr. Guatieri.

For the toy industry, movie fatigue has cut into manufacturers' potential sales. But, innovative toys profiled through social media, early rising toy sales starting in September and continued massive growth from board games will keep this year positive.

BMO Toys and Leisure Senior Analyst Gerrick Johnson forecasts a fourth consecutive year of growth in 2017 at around 1.5 percent, given early indications.

"Innovation is at the heart of growth in the industry this year," said Mr. Johnson. "From privately-owned companies taking advantage of nimble business, to the surge from a new genre of board games (called table top games), companies that are innovating are growing."

After three years of above-average growth in toy sales during the holiday season, relative soft growth in 2017 can be attributed in part to "movie fatigue".

"We have far more movie toys than in past years and they have not been driving the sales that many toy companies anticipated," said Mr. Johnson. "Too many movies released one after another without new characters that resonated with kids became a bad bet for many major toy manufacturers."

Mr. Johnson cites smaller private companies as the key performance drivers this year, creating and marketing toys coming out of untraditional places like social media and YouTube. "Kids are discovering toys through YouTube and Instagram, watching unboxing and toy explanation videos. The concept of play through social media is emerging and is already affecting the market in a positive way. We expect that trend to continue through this holiday season."

BMO Capital Markets experts forecast the following trends ahead of the U.S. holiday shopping season:

Sal Guatieri, Senior Economist, BMO Capital Markets:

Gerrick Johnson, Analyst, Toys and Leisure

About BMO Financial Group
Serving customers for 200 years and counting, BMO is a highly diversified financial services provider ? the 8th largest bank, by assets, in North America. With total assets of $709 billion as of July 31, 2017, and more than 45,000 employees, BMO provides a broad range of personal and commercial banking, wealth management and investment banking products and services to more than 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, Wealth Management and BMO Capital Markets.

For Important Disclosures on the stocks discussed, please go to http://researchglobal.bmocapitalmarkets.com/Public/Company_Disclosure_Public.aspx or write to Editorial Department, BMO Capital Markets, 3 Times Square, New York, NY  10036 or Editorial Department, BMO Capital Markets, 1 First Canadian Place, Toronto, Ontario, M5X 1H3.

SOURCE BMO Financial Group


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