2018 U.S. Holiday Retail Forecast

This Holiday Cheer Could Be a Last Hurrah

After 60 years as a familiar fixture in the retail landscape, Toys “R” Us will be conspicuously absent from the scene this holiday season. Commentators and shoppers may lament its demise but the void it leaves won’t cause any children to awaken to disappointment come Christmas morning.

Those many billions in sales will not leave the retail ecosystem: others will divide that haul. Such is the fluid, mutable and disrupted state of retailing in 2018. If we’ve learned anything about retailing in the last decade or so, it’s that nobody is too big to be threatened by the digital transformation that is still rippling across the sector. In fact, several notable retail chains that have failed and disappeared altogether over the last decade were not also-rans; some were once big kahunas themselves, with Toys “R” Us perhaps the most prominent example of a once dominant retailer that has bitten the dust. In contrast, Sears and Kmart haven’t been dominant in decades and their parent company, Sears Holding, finally ran out of time and money, putting an end to a painfully slow death spectacle. Other casualties are coming in 2019, and we all know the names on that short list.

As we enter the 2018 holiday season, there are 21 publicly owned retailers with market valuations-to-sales of less than 20%, an exceedingly low relative market value. Furthermore, 9 of these 21 had a market cap-to-sales of less than 10%, an indication of deep distress coming from investors. There are also several private equity owned retailers on the ropes as well. Some of these names will file for bankruptcy in 2019—and a few of them may disappear entirely. No degree of over-performance this holiday season will alter that trajectory.