Saturday Night live skits notwithstanding, the upcoming presidential election impacts more than just politics. Retailers and consumers alike keep an attentive eye on the debates and polices as the election outcome is positioned to shape the economic and social landscape.
As the presidential election cycle moves full steam ahead, candidates have been pressed to explain how they will invigorate retail sales conditions for both small and big businesses. In reality, the outcome of the election most likely won’t change retail sales long term but how does an election year impact consumer spending?
There is clearly a trend in the weeks leading up to the election that shows retail sales suppress as shoppers are bombarded with political advertisements that ultimately shift their focus towards the issues and uncertainty of a new president. Our research shows the percentage of sales decreases from 5%-10% in the three weeks leading up to the presidential election while they bounce back with a 3%-11% increase later in November and into December.
While shoppers become overly consumed pre-election, the distractions don’t linger. We see an immediate post-election lift in sales above normal YOY performance, likely due to the pent-up demand and nearing holiday season.
How can retailers position their business to take advantage?
The key is to rethink marketing spend and sales expectations leading up to the election and redistribute marketing dollars accordingly into November and December. One thing retailers need to keep in mind this year, in particular, is that early holiday shopping in October 2015 played a big role in holiday sales last year but this may not materialize in October 2016 as election rhetoric will be at full tilt.
Another fact about retail sales post-presidential election cycle is historically, sales decline the year following the election with two exceptions, noted by Steve Pruitt, founder and senior consultant of Blacks Retail. “Every year since 1950, except for two in which the economy was experiencing a recovery, there was a downturn in retail sales [the year after an election].” As the economy continues its slow climb out of its recession, we could see a similar affect, resulting in improved sales in2017. This could be a much-needed shot in the arm for retailers that have been longing for better days.
How can retailers use these trends to their advantage? Here are three things to keep in mind:
- Approach the election cycle with thoughtful and cautious planning but don’t give up the fall selling season entirely and be ready to react to the positive upswing post-election.
- Leverage third-party data to enhance your customer profiles to combat the ups and downs of the election cycle.
- Refrain from being overly promotional as customers react emotionally to the election. Leverage data to craft the right message and the right offer for your customer base.
While shoppers tend to go silent during the campaign cycle due to the inundation of political ads, direct mail, email and phone calls they bounce back quickly. Retailers must be prepared to take advantage of consumer demand post-election.