Holiday spending predicted to remain brisk

Consumer spending is strong and that bodes well for the winter holiday shopping season. The National Retail Federation is forecasting holiday spending will grow between 2.5 percent and 3.5 percent over 2023. That works out to between $979.5 billion and $989 billion in total holiday spending between Nov. 1 and Dec. 31, 2024, compared with $955.6 billion during the same period last year. The figures exclude restaurants, gas stations and automobile sales, the NRF said. "It has been another solid year for the U.S. economy," NRF President and CEO Matthew Shay said in a call with reporters. "The winter holidays are an important tradition to American families, and their capacity to spend will continue to be supported by a strong job market and wage growth."

The holiday forecast is consistent with NRF's forecast for annual retail sales growth, pegged at between 2.2 percent and 3.5 percent over 2023. "That's absolute real growth," Shay said.

Online shopping will be a primary contributor to overall holiday sales. The NRF expects online and other non-store sales (which are included in the total) to increase between 8 percent and 9 percent to total between $295.1 billion and $297.9 billion. This figure is up from $273.3 billion last year. The percentage increase, however, is down slightly from last year, when non-store sales rose 10.7 percent over 2022.

But as Shay noted, consumers are "increasingly agnostic," showing no real preferences for which shopping channels they use.

"We remain optimistic about the pace of economic activity and growth projected in the second half of the year," said Jack Kleinhenz, NRF chief economist. "The economy has performed really well," he said. And so far this year, retail sales are up 3.8 percent. "Household finances are in good shape and impetus for strong spending heading into the holiday season," he added.

Shorter shopping season, lower prices

With Thanksgiving falling later this year than most years, on Nov. 28, the traditional holiday shopping season will be six days shorter. That's why many retailers have begun promotional sales already, Shay noted.

"We're seeing broader promotional activity than last year," Shay said, adding that prices on thousands of items and SKUs across entire stores are being reduced.

Kleinhenz said he expects "organic reductions in pricing" during the holiday season. Prices will be about 1 percent lower than a year ago. "That should help prompt more spending," he said.

The wild card in all this will be the shipping of items purchased online and through other non-store channels. "Consumers are more concerned [about shipping delays], but they are also being more pragmatic," Shay said. They are making online and other non-store purchases earlier in the shopping cycle as a hedge against shipping delays.

Shay added that retailers are also working more closely with their supply and shipping partners to make sure the right inventory is in the right places in order to get to consumers on time.

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