This holiday season, retailers will have to fight harder than ever for their share of consumer dollars.
The National Retail Federation is projecting 3.7% sales growth in November and December, the lowest since 2009.
“Americans remain somewhat torn between their desire and their ability to spend; the fact remains consumers still have the weight of the economy on their minds, further explaining the complex retail spending environment we are seeing right now,” NRF president Matthew Shay said in a company release.
But despite the difficult environment, a few brands will stand out, according to analysts at Morgan Stanley.
1. Victoria’s Secret
Victoria’s Secret is in good shape this holiday season thanks to innovative products like a new push-up bra that claims to add 1.5 cup sizes and an expanded Pink collection for college students.
The brand also won’t be hurt by the warmer temperatures meteorologists are predicting, because lingerie isn’t a seasonal item.
That puts Victoria’s Secret ahead of other apparel retailers like Macy’s and JCPenney, which rely on sweater and coat sales during the holiday season.
Lululemon could grow sales by as much as 12% this holiday season, according to Morgan Stanley.
The brand’s new tank top and pant designs differentiate it from other athleisure brands.
Lululemon is also gaining traction in menswear, which could be another meaningful driver of sales.
3. Ross Stores
Similar to TJ Maxx, Ross operates discount outlets.
The brand is expected to benefit from a decline in gas prices, which will give the middle class more spending power, according to Morgan Stanley.
Finally, discounted Ross will benefit from the trend of Americans wanting to spend less on brand-name apparel and more on healthcare, technology, and home improvement.
The company is the biggest player in the athletic apparel market, with $US28 billion in annual sales.
Nike has plans to grow the business even larger by focusing on a few key demographics, including women, runners, and student athletes.
Nike grew its e-commerce sales by 46% in the first quarter, and Morgan Stanley analysts expect the holiday season to drive growth.
5. Best Buy
New technology in 4K televisions, cell phones, and wearable technology will drive sales at Best Buy.
The company has also scored exclusive partnerships with Verizon in mobile and Samsung in appliances, giving shoppers a compelling reason to visit.
Morgan Stanley analysts also praise Best Buy’s customer service relative to other electronics retailers.
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