The National Retail Federation (NRF) delivered its annual holiday forecast, predicting sales during November and December will be between 3 percent and 4 percent higher over 2022, similar to pre-pandemic levels.
The NRF expects sales to range between $957.3 billion and $966.6 billion, representing record levels.
“It is not surprising to see holiday sales growth returning to pre-pandemic levels,” NRF President and CEO Matthew Shay stated. “Overall household finances remain in good shape and will continue to support the consumer’s ability to spend.”
Despite a slower growth rate compared to the last three years, when trillions of government stimulus money led to unprecedented rates of retail spending during the pandemic, the NRF forecasted that this year’s holiday spending would be consistent with the average annual holiday increase of 3.6 percent from 2010 to 2019.
Online shopping has been one of the biggest shifts in consumer spending behavior since the pandemic. Online and other non-store sales, included in the total, are expected to increase between 7 percent and 9 percent for a total of between $273.7 billion and $278.8 billion. That figure is up from $255.8 billion in 2022.
“Consumers remain in the driver’s seat and are resilient despite headwinds of inflation, higher gas prices, stringent credit conditions, and elevated interest rates,” NRF Chief Economist Jack Kleinhenz said. “We expect spending to continue through the end of the year on a range of items and experiences, but at a slower pace. Solid job and wage growth will be contributing factors this holiday season, and consumers will be looking for deals and discounts to stretch their dollars.
“For all that the consumer has kept the economy afloat, the composition of spending from goods to services will also define holiday sales trends,” Kleinhenz continued. “Service spending growth is strong and is growing faster than goods spending. The amount of spending on services is back in line with pre-pandemic trends.”
To meet demand this holiday season, the NRF expects retailers will hire between 345,000 and 450,000 seasonal workers, in line with 391,000 seasonal hires in 2022. Some of the seasonal hires that retailers made may have been pulled into October to support their holiday buying events.
Despite months of preparation for the holiday season, the NRF noted that retailers could sustain unpredictable impacts from weather. This year, holiday retail spending could experience residual effects from El Niño, depending on the strength and persistence of the weather pattern.
The NRF based its holiday forecast on economic modeling, considering various indicators, including employment, wages, consumer confidence, disposable income, consumer credit, and previous retail sales. The NRF’s calculation excludes automobile dealers, gas stations and restaurants to focus on core retail.
The NRF defines the holiday season as November 1 through December 31.
The NRF’s latest holiday survey conducted by Prosper Insights & Analytics, which is separate from the holiday sales forecast, shows that 43 percent of respondents plan to purchase holiday items before November. The survey also found that respondents plan to spend $875 on core holiday items, including gifts, decorations, food, and other holiday-related merchandise this year. For more holiday winter trends from the NRF, go here.
Photo courtesy Nordstrom, Holiday Campaign 2023
