- National Retail Federation anticipates a 3.6 percent to 5.2 percent increase in holiday spending in November and December
- Group says consumers have leaned into retail spending during the pandemic and are eager to end 2020 on a positive note
- Slow economic recovery and third wave of COVID-19 cases could dampen sales, although positive vaccine news has also led to optimism
Consumers eager to have a “better than normal” holiday to cap off a tumultuous year will lead to higher than average spending in the final months of 2020, the National Retail Federation is predicting.
The retail trade group forecasts that holiday spending in November and December (which excludes auto, gas station, and restaurant sales) will fall between $755.3 billion and $766.7 billion, which would be a 3.6 percent to 5.2 percent increase over the same period in 2019. Holiday spending last year saw annual growth of 4 percent, and the increase has averaged 3.5 percent over the past five years.
NRF anticipates that online and other non-store sales will fall between $202.5 billion and $218.4 billion – an annual increase of 20 to 30 percent.
The forecast was delayed due to uncertainty over how the third wave of COVID-19 infections could affect business restrictions or shopper behavior. NRF also held off on its prediction, which is usually released in early October, to await the results of the 2020 election and to see if any stimulus bill might pass Congress.
The anticipated increase is due in part to a psychological factor, with shoppers looking for a happy way to end a year which has been marred by diminished social opportunities due to the COVID-19 pandemic. NRF says other positive economic factors include a strong stock market, rising home values, low energy costs, and more disposable income for holiday shopping due to less spending on travel, entertainment, and personal services.
NRF also expects a strong holiday shopping season due to an overall V-shaped recovery in the retail sector. While small and mid-sized retailers have not fared as well as large ones, aggregate retail sales have shown monthly and annual growth since June. Consumers have also been putting more emphasis on holidays, with strong spending for Mother’s Day, Father’s Day, Memorial Day, and Halloween.
Other organizations have been more cautious in their assessments, with MasterCard predicting that retail spending will go up by 2.4 percent and Deloitte anticipating growth of up to 3.5 percent. Overall retail spending was lower than expected in October, and holiday spending could still be depressed by COVID-19 or elevated unemployment numbers.
NRF says retailers have invested billions in public health and safety improvements to meet the anticipated demand. The organization also says that it has seen a strong boost in early shopping, including a survey indicating that 42 percent of respondents planned to start holiday shopping sooner than usual and that 59 percent had begun by November.
