What’s happening: US retail sales increased last month as consumers continued to dish out on clothing, furniture and groceries. Sales beat economists’ expectations, increasing 0.7% in August from the month prior, the Census Bureau said Thursday.
And new forecasts from Deloitte, Bain & Company and Mastercard predict a huge sales boom in the coming months, the most important time of the year for retailers.
Deloitte estimates that holiday sales will increase between 7% and 9% in 2021 as vaccinations help shoppers feel more comfortable venturing out to spend some of the cash they’ve been hoarding.
“A steady decline in the savings rate to pre-pandemic levels will support consumer spending and keep retail sales elevated this season,” said Daniel Bachman, Deloitte’s US economic forecaster. “Further, e-commerce sales will continue to grow as consumers demonstrate an ongoing and steady movement toward buying online across all categories.”
The consulting firm expects online sales to jump between 11% and 15% year-over-year, reaching up to $218 billion.
“The pandemic has impacted nearly every inch of the retail industry,” said Aaron Cheris, the head of Bain & Company’s Americas Retail practice. “However, heading into this holiday season, we also see important tailwinds for nominal retail growth, including boosts from inflation, rebounding employment, healthy savings rates and wage growth.”
But wait: Supply chains remain badly tangled, causing shipping costs to soar. Some companies worry that empty shelves and shortages of in-demand products could dampen the mood.
“The demand is going to be there,” MGA Entertainment CEO Isaac Larian told Fintech Zoom Business late last month. “What is not going to be there is the product to fill the demand.”
“This holiday season will be defined by early shopping,” Steve Sadove, senior advisor for Mastercard, said in a statement.
Investor insight: A spending surge would be good news for retail stocks, which shot up earlier this year but have been caught in a holding pattern in recent months. The SPDR S&P Retail ETF is up 45% year-to-date, but has shed 4.4% in the third quarter.
Cigarette giant Philip Morris takes control of inhaler maker
One of the world’s largest tobacco companies is getting into the medical device business, despite concerns from health care charities.
More than 45% of Vectura shareholders accepted the takeover offer, and Philip Morris international purchased 29% of the company’s shares on the open market, my Fintech Zoom Business colleague Charles Riley reports.
“We have reached an important milestone in our acquisition of Vectura,” Philip Morris CEO Jacek Olczak said in a statement. “We are very excited about the critical role Vectura will play in our Beyond Nicotine strategy.”
Step back: The takeover boosts the tobacco company’s efforts to generate more than half of its net revenue from smoke-free products such as e-cigarettes and respiratory drugs within four years, up from about a quarter today. PMI currently sells cigarettes in more than 175 markets.
Vectura has manufactured 13 inhaled medicines for companies such as Novartis and GlaxoSmithKline to treat lung conditions including asthma.
Health care charities have objected to the £1 billion ($1.4 billion) takeover.
Kjeld Hansen, chair of the European Lung Foundation, said he was “very disappointed” to see the deal finalized.
“The prospect of someone potentially profiting from selling one product that harms the lungs and another that treats the lung disease it causes is beyond worrying,” Hansen said in a statement on Thursday. “For someone living with a lung condition, the sale is devastating.”
The iPhone 13’s secret weapon is, surprisingly, its price
Apple’s new iPhone 13 and 13 Pro lineup features all of the predictable upgrades: faster performance, longer lasting battery life, better screen and new colors.
The biggest surprise? Its price, my Fintech Zoom Business colleague Samantha Murphy Kelly reports.
Apple kept the cost of its iPhones mostly in line with last year’s models, despite rumors they’d be more expensive because of issues with the supply chain for computer chips.
Massive discounts and trade-in offers from US carriers are available, too. AT&T, for example, is offering up to $1,000 toward a new iPhone 13 Pro and Pro Max after a trade-in, while Verizon is touting as much as $800 off any new iPhone, essentially paying for the cost of a 128 GB iPhone 13. (WarnerMedia, the parent company of Fintech Zoom, is owned by AT&T.)
Apple also continues to offer iPhones at a wide range of prices to appeal to more customers.
“Apple has become the king of the ‘good, better, best’ portfolio with a phone at every relevant price point, particularly given it typically keeps older models in its line-up for those that don’t want to pay four figures for the latest and greatest new devices,” said Ben Wood, chief analyst of market research firm CCS Insight.
Investor insight: Pricing options will be vital in encouraging even more people to upgrade their devices, allowing Apple to continue its hot selling streak. So far, investors are in wait-and-see mode, with shares falling 0.4% since Tuesday’s launch event.
US retail sales for August and initial US jobless claims from last week post at 8:30 a.m. ET.
Coming tomorrow: Consumer sentiment data from the University of Michigan.