As the economy continues to improve, American consumers are regaining confidence both in business conditions as well as their personal finances. Recent research has found that many people are hitting stores and increasing their spending as they begin to feel better about the future. Additionally, consumer sentiment is rising, which has reached the highest levels in five years. All of these positive signs mean good news for retailers throughout the country, as shoppers are expected to visit stores in droves over the next few months in preparation for the holiday season.

September sees better-than-expected consumer spending

According to The Associated Press, the most recent report from the U.S. Commerce Department revealed that for the month of September, consumers spent at twice the rate that their incomes increased. From August, spending rose by 0.8 percent in September, following a 0.5 percent growth in the previous month. This represents a strong sign of confidence among American consumers and is also the best showing since February, states the news source.

As consumer spending activity is such a large driver of the economy, the increases in the third quarter helped to with the 2 percent rise of economic growth during the time period. This boost followed the second quarter's increases of 1.3 percent, writes the source.

October consumer sentiment reaches five-year high

ENews Park Forest reports that the recent and significant rise in spending could be due to the fact that consumer sentiment rose to its highest levels in five years, according to the Thomson Reuters/University of Michigan Survey of Consumers. The research revealed that Americans are feeling increasingly optimistic not only about their own personal finances, but also about the nation's economy and the employment outlook.

The sentiment index figure was at 82.6, up from September's figure of 78.3 and October 2011' index of 60.8. Expectations are also on the rise, with this month's figure coming in at 79. Last month's index was at 73.5, and a year ago it was 51.7.

"Overall, consumers were more confident about economic prospects in October than any other time during the past five years," said University of Michigan economist and director of the Surveys of Consumers Richard Curtin.

American consumers will not only be spreading their holiday cheer to their families and loved ones this holiday season. Retailers should anticipate to see more optimism among shoppers over the coming months, as people begin buying gifts and increase their purchasing amounts from last year.

According to a recent study by Deloitte, approximately half of the consumers surveyed stated they believe the economy will improve within the next year, which is giving them more confidence financially. This could result in a strong holiday shopping season and increased revenues for retailers. Additionally, the research also revealed that only 33 percent of customers said they are going to spend less this holiday season than they did last year. This is the lowest level the figure has been as since 2006. The study's authors said that even though the upcoming presidential election and continuing economic uncertainty are still on the minds of Americans, the next few months will be strong in terms of retail shopping.

This positive news comes after the National Retail Federation (NRF) released a report stating that the organizations expects to see a 4.1 percent increase in holiday sales this year, up from 2011' totals. The NRF estimates that retail purchases will reach $586.1 billion during the season.

American consumers are steadily regaining their confidence both in the economy and their own financial conditions as recent research has revealed that sentiment and spending are up. This is good news for retailers, especially as the holiday season approaches. These positive numbers are pointing to signs that this year's holiday purchasing totals will at least meet, if not surpass, last year's amounts.

Consumer spending increasing

A newly released study by Chase, titled the Chase Freedom Lifestyle Index, looked at the recent buying habits of their cardholders and found that for this year's third quarter, spending increased by 4 percent from the same period last year. From the second quarter, there was a 1 percent increase, continuing the trend of rising spending as it jumped by 9 percent between this year's first and second quarters. The research found that there were a variety of factors that contributed to the jumps in purchasing, including boosts in back-to-school shopping, outdoor and leisure activities.

"Consumers are slowly beginning to open their wallets, based on the steady increases in spending we are witnessing," said Phil Christian, general manager of Chase Freedom. "The overall trends suggest that consumers are increasing discretionary entertainment and leisure spending on a year-over-year basis, which is a good sign from an economic recovery perspective. As we enter into the holiday season, we believe the current spending trends point to what is likely to be a strong holiday shopping season in the fourth quarter."

Sentiment also on the rise

Besides spending, another factor that is pointing to a steadily recovering economy is the recent rise in consumer sentiment. According to the Thomson Reuters/University of Michigan's October index, sentiment rose to 83.1, up from 78.3 in September. This month's figure also represents the highest it has been since September 2007. Authors of the report and economists stated that Americans are feeling more optimistic about economic conditions for both the short- and long-term, as the nation's unemployment rate in September fell to 7.8 percent.

"We are getting some quite interesting signals from consumer sentiment and employment data – both (the) unemployment rate and initial claims – that there has been some quite significant improvement in the economy," said David Sloan, an economist at 4Cast.

Retailers are looking for a sign that this year's holiday shopping season will be strong, and industry experts are saying the solid back-to-school sales are an indication that the next few months will see an increase in retail sales as consumers hit the stores to buy items and gifts.

According to recent research from the Great American Group, in August, shoppers increased their apparel and footwear purchasing to prepare for the back-to-school season, as many retailers reported strong sales throughout the month. Although September's retail sales were not as high as the previous month's, the study states that the totals were strong and met the expectations of retailers and economists. Great American Group reports that the successful back-to-school season could mean good news for retail holiday sales, but there are still many concerns on the minds of consumers which could impact the numbers, including increased food costs and fluctuating gas prices.

Despite the drop in retail sales for September, many industry experts have confidence for the coming months, reports The Day. For August, retailers saw a 6 percent increase in sales. That number rose only by 3.9 percent for September, but analysts are stating that the consistent growth is expected to carry over into this holiday season.

Shoppers are already gearing up for the holiday season this year, and one indicator of how strong the next few months will be for retailers is the fact that more consumers are prepared to spend more money on gifts and items.

According to a recent survey by PriceGrabber, more than half of customers stated they are planning on spending at least $500 on products and gifts for the holidays this year. When it comes to what they will purchase, the study found that clothing items and gift cards continue to be most popular for the season. Clothing garnered 65 percent of responses, while gift cards brought in 49 percent. Consumers are also looking to save money by taking advantage of discounts and deals between November and December, the report stated.

These numbers correlate with recent research by the National Retail Federation (NRF), which found that the average shopper will be spending $749.51, up from last year's average of $740.57. The NRF also stated estimates that this year's holiday spending totals will reach $586.1 billion, representing a 4.1 percent increase from 2011's amounts.

The U.S. consumer sentiment index has reached its highest level in five years, which could be a strong indication of a steadily improving economy, especially after the unemployment rate for September fell to 7.8 percent. Shoppers are feeling more confident in their financial conditions, and retailers could see the impact of this over the next few months.

According to the Thomson Reuters/University of Michigan October reading, the overall index rose to 83.1, up from September's figure of 78.3. The current rate is the highest it has been since September 2007. As for consumer expectations, the index also rose significantly, from last month's figure of 73.5 to 79.5 for October. The source reports that the expected reading for the month was at 74. This new information, along with the recent drop in unemployment and low number of Americans filing for jobless benefits, has many economists believing that conditions are steadily improving.

"We are getting some quite interesting signals from consumer sentiment and employment data – both (the) unemployment rate and initial claims – that there has been some quite significant improvement in the economy," said David Sloan, an economist at 4Cast.

Retailers are also becoming more confident. Richard Feinberg, a professor of consumer sciences and retailing at Purdue University, states that the jumps in hiring by retailers for the upcoming holiday season are pointing to optimism within the industry.

With the emergence of new forms of communication, such as mobile and email, consumers are now able to reach out to retailers concerning service issues. For this reason, it is important for companies to keep up with these changes and implement solutions that allow them to effectively provide satisfactory service experiences to customers. These practices can lead to increased retention and brand loyalty, which ultimately benefits retailers and their operations.

Nordstrom's always improving service efforts

One company that has decided to take its service methods to the next level is the department store Nordstrom, according to Shop.org. Speaking at last month's Shop.org Summit, Jamie Nordstrom, president of Nordstrom Direct, told attendees about his company's constant efforts to improve customer service and provide satisfactory consumer experiences. Nordstrom stated that providing excellent service helps businesses sell more, as shoppers significantly value great retail interactions.

Nordstrom also offered several suggestions that retailers can follow when it comes to their own service strategies. Many merchants now manage both in-store and online operations, so it is essential that excellent customer experiences be provided in both shopping mediums. For this reason, retailers must be prepared to offer streamlined service through all channels. Nordstrom also said that the importance of retail stores is not diminishing, even though mobile and social media are proving to be valuable selling methods. Properly trained staff can help to increase customer satisfaction in stores.

One of the key aspects, stated Nordstrom, is for retailers to be innovative in their customer service efforts. Some will work for certain merchants, and others will not. The vital thing is to find the ones that work best for consumers and operations.

Excellent customer service goes beyond a smile

While it's always better to deal with nice staff members who serve customers with a smile, oftentimes this will not be enough to provide a satisfactory service experience. B&T reports that customers are also looking for extensive product knowledge when they interact with retail employees.

"Training and teaching people to smile at the door and say hello when a customer first walks in is just not going to cut it anymore," Adele Reddington, senior consultant of employee engagement at Interbrand Sydney, told the source. "It is more about giving staff greater control and understanding around the brand itself and helping them embody the brand."

The National Retail Federation (NRF) recently announced that it estimates that approximately $18 million is saved each day for consumers and merchants since the debit card swipe fee reform went into effect.

The NRF is citing a study from Javelin Strategy and Research which found that more than $6.6 billion has been taken out of banks' debit card swipe revenue. Before October 1, 2011, when the law was enacted, consumers and retailers were charged $22 billion in 2010 for using their debit cards and processing the transactions.

"Merchants haven't necessarily labeled the savings from reform as a 'debit discount' but they have nonetheless found a variety of ways to pass the value along to their customers," NRF president and CEO Matthew Shay said. "Retailers are simply too competitive not to share savings with consumers because customer value is one of the key ways they take market share away from their competitors."

PYMNTS states that retailers are using the savings from the swipe reform to reduce prices for customers. The new law is helping to improve the U.S. economy and could lead to a decrease in swipe fees for credit cards. 

Retailers throughout Canada experienced a better-than-expected summer in terms of sales, and now they are hoping to carry that momentum into the fall and holiday shopping seasons.

According to CTV Atlantic, an increase in tourists is what resulted in exceptional retail sales for merchants. Some retailers told the source that strong summer seasons usually indicate that holiday sales will be solid, and since the numbers were good during the warmer months, things are already looking up for the colder season. Steve Clerke, a retailer in Moncton, New Brunswick, said that he had to hire additional workers and extend the opening hours of his business to meet tourists' demands.

"We've been here for 27 years and we've seen such an incredible increase in tourism for us this summer," Clerke told the news source.

One aspect that might impact retailers this holiday season is ecommerce. Internet Retailer reports that a study by eMarketer found that Canadian online commerce is expected to surpass that of the United States. For this year, internet sales will grow 14.3 percent, compared to the 13.8 percent in the U.S. Ecommerce in Canada will account for $21.45 billion in total purchases.

Although it is still a few months away, retailers are already gearing up for the holiday shopping season. As economic conditions continue to improve and consumers steadily regain confidence, retailers are looking forward to the rush of shoppers that will visit their stores and websites to purchase gifts over the next few months.

Retailing Today cites a study by Booz & Company which found that there are several customer purchasing trends that are expected to impact retailers this year. Consumer are more optimistic about the holiday season this year, and 51 percent of those surveyed said economic survival was a great reason for celebrating this year. Nearly three-quarters anticipate that they will find great deals when shopping, which is an increase from last year's 62 percent who said the same thing.

"While technology enhancements and economic uncertainty will both impact this holiday season, there is a dose of optimism compared to 2011, as people shop with a value-seeking mindset," said Thom Blischok, chief retail strategist for Booz & Co.

Retailers across the country have already started putting out holiday displays and sticking their shelves with merchandise, reports The Register Guard. Promotions have already been launched, and some larger retailers, such as Walmart and Toys R Us, are bringing back layaway options for cash-conscious consumers.