US holiday spending forecast to be the highest on record, as the National Retail Federation (NRF) this week said holiday sales during November and December will grow between 8.5 percent and 10.5 percent over 2020 to between 843.4 billion and 859 billion dollars. The figures compare with a previous high of 8.2 percent in 2020 to 777.3 billion dollars and an average increase of 4.4 percent over the past five years.
“There is considerable momentum heading into the holiday shopping season,” NRF President and CEO Matthew Shay said. “Consumers are in a very favorable position going into the last few months of the year as income is rising and household balance sheets have never been stronger. Retailers are making significant investments in their supply chains and spending heavily to ensure they have products on their shelves to meet this time of exceptional consumer demand.”
Online shopping to surge 15 percent
NRF expects that online and other non-store sales, which are included in the total, will increase between 11 percent and 15 percent to a total of between 218.3 billion and 226.2 billion dollars driven by online purchases. In comparison, that number is up from 196.7 billion dollars in 2020.
Last year saw extraordinary growth in digital channels as consumers turned to online shopping to meet their holiday needs during the pandemic. While ecommerce will remain important, households are also expected to shift back to in-store shopping and a more traditional holiday shopping experience. “The outlook for the holiday season looks very bright,” NRF Chief Economist Jack Kleinhenz said. “The unusual and beneficial position we find ourselves in is that households have increased spending vigorously throughout most of 2021 and remain with plenty of holiday purchasing power.”
Supply chain issue to be felt later in shopping season
“Pandemic-related supply chain disruptions have caused shortages of merchandise and most of this year’s inflationary pressure,” Kleinhenz said. “With the prospect of consumers seeking to shop early, inventories may be pulled down sooner and shortages may develop in the later weeks of the shopping season. However, if retailers can keep merchandise on the shelves and merchandise arrives before Christmas, it could be a stellar holiday sales season.”
NRF expects retailers will hire between 500,000 and 665,000 seasonal workers. That compares with 486,000 seasonal hires in 2020. Some of this hiring may have been pulled into October as many retailers encouraged households to shop early to avoid a lack of inventory and shipping delays. With the earlier start retailers have announced thousands of open positions in bricks-and-mortar stores and warehouse and distribution centers.
NRF’s holiday forecast is based on economic modelling that considers a variety of indicators including employment, wages, consumer confidence, disposable income, consumer credit, previous retail sales and weather. NRF defines the holiday season as November 1 through December 31.