Despite recent hurricane impacts, the economy generally remains strong, with consumer spending driving growth in the 2024 winter holiday season, according to the National Retail Federation (NRF) retail sales forecast released Oct. 15.
The Washington, D.C.-based NRF advocates for the people, brands, policies, and ideas that help retail succeed. Retail is the nation’s largest private-sector employer, contributing US$5.3 trillion to annual GDP and supporting more than one in four jobs in the United States.
The report highlights a 3.4% year-over-year rise in retail sales, with holiday sales forecasted to grow between 2.5% and 3.5%, totaling between $980 billion and $990 billion. A shorter holiday shopping period and ongoing inflation pose challenges, but early marketing and e-commerce growth are mitigating factors.
Employment remains healthy, with wages growing and consumer credit showing stability. This forecast aligns with pre-pandemic holiday sales growth rates.
“The 2024 holiday season offers more ‘normalcy’ for retailers with inflation cooling. Still, there is no doubt that consumers continue to seek value,” Matt Pavich, senior director of strategy and innovation at pricing optimization solutions provider Revionics, told the E-Commerce Times.
Holiday Spending Stable Despite Shorter Shopping Season
Sale promotions, in general, will play a larger role this shopping season. Retailers will contend with shrinking shopper loyalties, a growing number of competitors across more channels, and a more dynamic landscape where prices are shifting more frequently to win over consumers looking for great deals, Pavich said.
Consumer spending, which makes up 70% of economic activity, has remained stable despite lingering inflation, particularly in services, he added. Wage growth has generally outpaced inflation, with goods inflation being flat to negative and food inflation moderately increased.
“Retail sales have shown consistent growth for 52 consecutive months, with a 3.4% increase in the first eight months of the year compared to the same period in 2023,” he offered.
Pavich noted that the holiday shopping period between Thanksgiving and Christmas will be six days shorter, impacting logistics and consumer expectations. To compensate for the shorter period, retailers started marketing and promotion campaigns earlier.
The shorter period may pressure the supply chain and fulfillment, affecting consumer convenience expectations. Non-store sales, including e-commerce, are expected to contribute to increased shipping value during the holiday season, he observed.
2024 Holiday Sales Poised for Steady Growth
The NRF forecasts holiday sales growth between 2.5% and 3.5% above last year’s holiday season. The forecast includes e-commerce, which is expected to grow between 8% to 9%, totaling $295 billion to $300 billion.
A related bright spot is the seasonal hiring this shopping season. NRF expects between 400,000 and 500,000 workers, reflecting a fully staffed retail industry.
The forecast methodology considers 20 economic data points, including GDP, employment, income, inflation, and interest rates.
“To reiterate, we are forecasting holiday retail sales will increase between two and a half to three and a half percent above last year’s holiday season,” emphasized Bill Thorne, senior vice president for communications and public affairs at NRF.
That works out to approximately $980 billion in sales compared to $955 billion in total holiday spend in 2023. Sales growth is consistent with the pre-pandemic average holiday annual increase of 3.6% from 2010 through 2019, he added.
“From what I hear, consumers have a continuing capacity to spend, and this year will be a record level of spending,” he said.
NRF: Economic Strength, Consumer Resilience Spark Spending
According to the NRF’s chief economist, Jack Kleinhenz, a 3% growth in the Gross Domestic Product (GDP) in the second quarter and a lower relative cost of energy helped consumer spending remain resilient. Household balance sheets also are in good shape. That credit goes to increased savings and net wealth, up 7.1% in the second quarter.
Although consumers still feel an economic pinch, inflation has cooperated. The Personal Consumption Expenditures Price Index (PCE) deflator is down to 2.2%, and retail prices are slightly lower than a year ago.
“Nevertheless, we are still believing that even with the inflation that persists to a certain degree, spending should be in a positive mode,” he predicted.
Kleinhenz announced that employment and labor remain healthy, with average monthly job gains of 186,000 workers in the last three months and an unemployment rate of 4.1%. However, weekly unemployment claims have been impacted by hurricanes and a Boeing strike, but overall employment data remains positive.
The U.S. Bureau of Labor Statistics (BLS) Job Openings and Labor Turnover Survey (JOLTS) data shows impressive job openings and hiring, indicating a robust labor market. Wage growth has been consistent, with wages up by 4.1%, said Kleinhenz.
Experian Data Also Suggests Better Holiday Sales
Credit and business data information company Experian’s latest Holiday Spending Trends and Insights report reveals key shifts in shopping behaviors. Researchers surveyed 1,000 consumers to compare holiday spending habits to data from the previous year.
The results identified the following trends:
- Increased use of “Buy Now, Pay Later” options, reflecting a cautious approach to spending amid economic uncertainties.
- Online shopping dominates purchases, accounting for about one-third of all holiday spending, especially among shoppers aged 30 to 39.
- CTV is the top engagement channel, reaching over two-thirds of the U.S. population, and is expected to be the most effective channel for reaching consumers during the holiday season.
“The American consumer has been more resilient than anyone could have expected. But that isn’t a free pass for retailers to under-invest in their stores,” Nikki Baird, vice president of strategy and product at retail technology company Aptos, told the E-Commerce Times.
Investments in labor, customer experience tech, and digital transformation of stores have been too easy to kick the can down the road until you suddenly realize no road is left, she asserted.
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