Continued consumer resilience is helping retail sales rebound, the National Retail Federation said on Nov. 23. This caused the industry group to forecast that holiday sales during November and December will increase between 3.6% and 5.2% over 2019 to a total between $755.3 billion and $766.7 billion.
The numbers compare with a 4% increase to $729.1 billion last year and an average holiday sales increase of 3.5% over the past 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,” NRF CEO Matthew Shay said in a statement. “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 that online and other non-store sales will increase between 20% and 30% to between $202.5 billion and $218.4 billion, up from $168.7 billion last year.
“Given the pandemic, there is uncertainty about consumers’ willingness to spend, but with the economy improving most have the ability to spend,” NRF Chief Economist Jack Kleinhenz said in a statement.“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," Kleinhenz added. "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.”
He said that due such factors as a strong stock market, increasing home values and record savings is resulting in strong balance sheets for consumers. He pointed out other factors contributing to this strong balance sheet are increasing wages combined with lower energy costs and reduced personal spending on personal services, travel and entertainment. The results in strong retail sales.
The economic rebound has not been felt the same by small and mid-sized retailers, says NRF. However looking aggregate retail sales have seen a V-shaped recovery, with growth both in month-over-month and year-over-year.
Sales in October were up 10.6% compared to October 2019. The group says this is due in part to early holiday shopping. Comparing the first 10 months of this year to the first 10 months of 2019, sales were up 6.4%
The trend in eCommerce continues with sales up 36.7% year-over-year during the third quarter. Holiday shopping will continue this digital trend. Online websites operated by brick-and-mortar retailers have become major players in the online market as retail channels have merged.
Another factor in looking at retail sales is the weather. The National Weather Service is forecasting cooler and wetter weather in the north and warmer and drier weather in the south. Kleinhenz said that combination has correlated with stronger retail holiday spending in the past and could be a factor this year.
The group reported earlier that 59% of shopping had begun in early November and that is up 49% from ten years ago.The earlier shopping cycle could explain that retailers expect to hire between 475,000 and 575,000 seasonal workers. This figure compares with 562,000 in 2019.
