NRF Forecasts $943B-$960B Holiday Retail Spend, at 6%-8% Growth
The National Retail Federation forecast 6%-8% sales growth for the Nov. 1-Dec. 31 holiday shopping season, to a total $942.6 billion-$960.4 billion in stores and online. Last year, retail sales -- excluding autos, gasoline and restaurants -- grew 13.5% vs. 2020 to a record $889.3 billion, NRF said.
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Some of the growth reflects higher prices, said NRF Chief Economist Jack Kleinhenz on a Thursday media call. Most categories have 4%-5% growth in prices, depending on category, while still showing volume growth, he said. Electronics and appliance stores prices are down 9% year on year, he said, citing the Personal Consumption Expenditures Price Index for September. Food and beverage have 11% higher prices. Online prices, he said, “seem to have resolved themselves” on a year-on-year basis.
In the face of economic “challenges” and “uncertainty,” consumers are “behaving more thoughtfully, a bit cautiously,” said NRF CEO Matthew Shay, but “they continue to spend on household priorities.” An NRF survey showed consumers plan to spend an average of $832.84 on gifts, food and decorations this season, in line with the average over the past decade.
Lower income consumers will supplement spending in the holiday season with savings and credit, while looking for discounts and deals “to stretch their dollars,” said Shay. With more of their monthly income meeting expenses for housing, rent, energy and food costs, “some of that is going to impact their gift giving,” he said.
When people are faced with higher prices, they have to consider, “Can I afford this or do I need to find something that’s a close substitute?” Kleinhenz said. Higher income consumers are showing “robust spending,” and spending by households with slightly lower income levels “remains durable and resilient,” said the economist.
NRF forecast online sales will grow 10%-12% to $262.8 billion-$267.8 billion Nov. 1-Dec. 31, up from $238.9 billion during the same period in 2021. Meanwhile, Adobe Analytics forecast Wednesday (see 2211020080) a 2.5% year-on-year e-commerce increase November-December to $209.7 billion. Adobe data is based on analysis of 1 trillion visits to retail sites and over 100 SKUs in the U.S.
Not addressing Adobe estimates specifically, Kleinhenz noted several forecasts have already been issued for the 2022 holiday season, saying NRF’s forecast may differ “depending on the number of months included or categories of spending.” NRF’s forecast is based on economic modeling that considers factors including employment, wages, consumer confidence, disposable income, consumer credit, previous retail sales and weather, he said.
NRF’s November-December forecast is in line with the organization’s full-year 2022 forecast for retail sales, which predicted retail sales will grow between 6% and 8% to more than $4.86 trillion this year, Shay said.
The 2022 holiday retail season is “anything but typical,” Kleinhenz said, calling it “generally positive” amid record inflation, rising interest rates and low consumer confidence levels. Though consumers began shopping earlier -- with 46% of surveyed shoppers saying they planned to start shopping before November -- NRF still expects consumers to respond to deals and promotions over the next two months.
NRF expects retailers will hire 450,000-600,000 seasonal workers for the holiday season vs. 669,800 seasonal hires in 2021. Some hiring may have been pulled into October by retailers looking to meet increased consumer demand, it said. The labor market “remains a challenge,” Shay said.