Holiday spending is expected to be healthy even with recent inflationary challenges, as the National Retail Federation today forecast that holiday retail sales during November and December will grow between 6% and 8% over 2021, reaching between $942.6 billion and $960.4 billion. Last year’s holiday sales grew 13.5% over 2020 and totaled $889.3 billion, breaking previous records. Holiday retail sales have averaged a 4.9% increase over the past 10 years, and pandemic-related spending in recent years has contributed considerably to this increase.
“While consumers are feeling the pressure of inflation and rising prices, and while there is continued stratification of spending and consumer behavior among households with different income levels, consumers remain resilient and continue to engage in shopping,” said Matthew Shay, president and CEO of NRF. “Faced with these challenges, many households will supplement their spending with savings and credit to provide a cushion for a positive holiday season.”
NRF expects that online and other non-store sales, which are included in the total, to increase between 10% and 12% to between $262.8 billion and $267.6 billion. This figure is up from $238.9 billion last year, which 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.
“This holiday season is anything but typical,” said Jack Kleinhenz, NRF’s chief economist. “NRF’s holiday forecast considers a variety of factors, but the overall outlook is positive as consumer fundamentals continue to drive economic activity. Despite record-high inflation, rising interest rates, and low confidence, consumers have held firm on their spending and remain in control.”
“The holiday shopping season began early this year—a growing trend in recent years—due to shopper concerns about inflation and product availability,” said Kleinhenz. “Retailers are responding to that demand, as seen with several major shopping events scheduled for October. While this could lead to some early sales, we expect to see continued sales and promotions throughout the remaining months.”
Kleinhenz’s comments reflect NRF consumer data, which shows that consumers have started their holiday shopping earlier over the past decade to spread out their budgets and avoid holiday shopping stress. This year, given concerns about inflation, 46% of holiday shoppers said they plan to browse or shop before November, according to the NRF’s annual survey conducted by Prosper Insights & Analytics. Still, consumers plan to spend an average of $832.84 on holiday gifts and items, such as decorations and food, in line with the 10-year average.
NRF expects retailers will hire between 450,000 and 600,000 seasonal workers. That compares with 669,800* seasonal hires in 2021. Some of this hiring may have been pulled into October as many retailers are eager to supplement their workforces to meet increased consumer demand.
While retailers face a multitude of challenges, one is totally out of their hands. Weather, as always, plays a role in holiday retail sales. The National Oceanic and Atmospheric Administration is forecasting warmer-than-average temperatures for the Southwest, Gulf Coast, and Eastern Seaboard, which cover a large swath of the U.S. population, but wetter and snowier conditions are expected for parts of the northern tier.
The NRF’s holiday forecast is consistent with the organization’s annual retail sales forecast, which predicted growth of 6% to 8% to exceed $4.86 trillion in 2022.
The NRF’s holiday forecast is based on economic models that consider various indicators, including employment, wages, consumer confidence, disposable income, consumer credit, past retail sales, and weather. The NRF’s calculation excludes auto dealerships, gas stations, and restaurants to focus on core retail trade. The NRF defines the holiday season as November 1 through December 31.
*The methodology used to calculate holiday retail employment in 2020 was modified to accommodate the significant impact of COVID-19 on overall employment in the sector. In 2021, the NRF returned to a traditional employment accumulation method.
For more information on the holidays, see the NRF’s “Winter Holidays” section. web page.
