Despite recent hurricane impacts, the economy generally stays strong, with consumer spending driving growth within the 2024 winter holiday season, based on the National Retail Federation (NRF) retail sales forecast released Oct. 15.
The Washington, D.C.-based NRF advocates for the people, brands, policies, and concepts that help retail succeed. Retail is the nation’s largest private-sector employer, contributing US$5.3 trillion to annual GDP and supporting a couple of in 4 jobs in the USA.
The report highlights a 3.4% year-over-year rise in retail sales, with holiday sales forecasted to grow between 2.5% and three.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 aspects.
Employment stays 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 isn’t a doubt that buyers proceed to hunt 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, usually, will play a bigger role this shopping season. Retailers will contend with shrinking shopper loyalties, a growing variety of competitors across more channels, and a more dynamic landscape where prices are shifting more regularly to win over consumers in search of 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 primary eight months of the yr in comparison with the identical period in 2023,” he offered.
Pavich noted that the vacation shopping period between Thanksgiving and Christmas might be six days shorter, impacting logistics and consumer expectations. To compensate for the shorter period, retailers began marketing and promotion campaigns earlier.
The shorter period may pressure the availability chain and success, affecting consumer convenience expectations. Non-store sales, including e-commerce, are expected to contribute to increased shipping value through the holiday season, he observed.
2024 Holiday Sales Poised for Regular Growth
The NRF forecasts holiday sales growth between 2.5% and three.5% above last yr’s holiday season. The forecast includes e-commerce, which is anticipated to grow between 8% to 9%, totaling $295 billion to $300 billion.
A related vivid spot is the seasonal hiring this shopping season. NRF expects between 400,000 and 500,000 staff, reflecting a totally staffed retail industry.
The forecast methodology considers 20 economic data points, including GDP, employment, income, inflation, and rates of interest.
“To reiterate, we’re forecasting holiday retail sales will increase between two and a half to a few and a half percent above last yr’s holiday season,” emphasized Bill Thorne, senior vice chairman for communications and public affairs at NRF.
That works out to roughly $980 billion in sales in comparison with $955 billion in total holiday spend in 2023. Sales growth is consistent with the pre-pandemic average holiday annual increase of three.6% from 2010 through 2019, he added.
“From what I hear, consumers have a seamless capability to spend, and this yr might be a record level of spending,” he said.
NRF: Economic Strength, Consumer Resilience Spark Spending
In response to the NRF’s chief economist, Jack Kleinhenz, a 3% growth within the Gross Domestic Product (GDP) in the second quarter and a lower relative cost of energy helped consumer spending remain resilient. Household balance sheets are also in fine condition. That credit goes to increased savings and net wealth, up 7.1% within the second quarter.
Although consumers still feel an economic pinch, inflation has cooperated. The Personal Consumption Expenditures Price Index (PCE) deflator is all the way down to 2.2%, and retail prices are barely lower than a yr ago.
“Nevertheless, we’re still believing that even with the inflation that persists to a certain degree, spending ought to be in a positive mode,” he predicted.
Kleinhenz announced that employment and labor remain healthy, with average monthly job gains of 186,000 staff within the last three months and an unemployment rate of 4.1%. Nonetheless, weekly unemployment claims have been impacted by hurricanes and a Boeing strike, but overall employment data stays 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 sturdy labor market. Wage growth has been consistent, with wages up by 4.1%, said Kleinhenz.
Experian Data Also Suggests Higher 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 match holiday spending habits to data from the previous yr.
The outcomes identified the next 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 amongst shoppers aged 30 to 39.
- CTV is the highest engagement channel, reaching over two-thirds of the U.S. population, and is anticipated to be essentially the most effective channel for reaching consumers through 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 of their stores,” Nikki Baird, vice chairman 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.
