This year’s holiday retail sales in the US are expected to increase by between 3.6% and 5.2% over 2019, as sales continue to rebound strongly due to continued consumer resilience.
The annual forecast from the National Retail Federation (NRF) predicts retail sales for November and December will reach between US$755.3bn and $766.7bn – up from $729.1bn last year.
The numbers, which exclude automobile dealers, gasoline stations and restaurants, compare with an average holiday sales increase of 3.5% over the previous five years.
“We know this holiday season will be unlike any other, and retailers have planned ahead by investing billions of dollars to ensure the health and safety of their employees and customers,” says NRF president and CEO Matthew Shay. “Consumers have shown they are excited about the holidays and are willing to spend on gifts that lift the spirits of family and friends after such a challenging year. We expect a strong finish to the holiday season and will continue to work with municipal and state officials to keep retailers open and the economy moving forward at this critical time.”
NRF expects online and other non-store sales, which are included in the total, will increase between 20-30% to a range of $202.5bn and $218.4bn, up from $168.7bn last year.
“Given the pandemic, there is uncertainty about consumers’ willingness to spend, but with the economy improving most have the ability to spend,” says NRF chief economist Jack Kleinhenz. “Consumers have experienced a difficult year but will likely spend more than anyone would have expected just a few months ago.
“After all they’ve been through, we think there’s going to be a psychological factor that they owe it to themselves and their families to have a better-than-normal holiday. There are risks to the economy if the virus continues to spread, but as long as consumers remain confident and upbeat, they will spend for the holiday season.”
Kleinhenz adds households have strong balance sheets supported by a strong stock market, rising home values, and record savings boosted by government stimulus payments issued earlier this year. Jobs and wages are growing, energy costs are low and reduced spending on personal services, travel and entertainment because of the virus has freed up money for retail spending, he notes.
As a result of store shutdowns and stay-at-home orders last spring, not all retailers and categories have rebounded as quickly, including small and mid-sized retailers. However, in the aggregate retail sales have seen a V-shaped recovery, growing both month-over-month and year-over-year each month since June. As calculated by NRF, sales were up 10.6% in October versus October 2019, likely driven in part by early holiday shopping. For the first ten months of this year, retail sales were up 6.4%t versus the first 10 months of 2019.
With e-commerce sales up 36.7% year-over-year during the third quarter, many households are expected to depend on digital shopping to make many of their holiday purchases, just as they have for much of their everyday spending this year. The online spending includes websites operated by bricks-and-mortar retailers, which have become major players in the online market as retail channels have merged.
The NRF forecast is based on an economic model that takes into consideration a variety of indicators including employment, wages, consumer confidence, disposable income, consumer credit, previous retail sales, and weather.
The forecast comes as NRF’s latest research shows more than 40% of holiday shoppers have started their holiday shopping earlier than they normally do and clothing once again tops consumer shopping lists.