Anticipated increase of 3.5% in holiday sales: Deloitte's forecast
Holiday Retail Sales Outlook: A New Year, A Moderate Growth
Here's the lowdown on holiday retail sales for the coming season:
- The holiday sales growth is anticipated to decelerate, with retail sales likely to surge between 3.5% to 4.6% this year, compared to last year's festive bonanza, as per a recent Deloitte report.
- The projected holiday sales, between November 2023 and January 2024, are expected to range between $1.54 trillion and $1.56 trillion. This growth represents a more subdued expansion compared to last year's season, where holiday sales surged by 7.6% and reached $1.49 trillion.
- E-commerce sales are estimated to soar by 10.3% to 12.8% year over year, potentially stretching online holiday sales to between $278 billion and $284 billion.
- After years of increased spending on services, the trend might plateau, whereas spending on durable goods continues to remain robust compared to pre-pandemic levels. Nick Handrinos, vice chair of Deloitte, notes that e-commerce sales could remain robust during the holiday season as shoppers seek online deals to make the most of their stretched budgets.
- Daniel Bachman, Deloitte's U.S. economic forecaster, suggests that healthy employment and income growth will keep sales volumes growing for the 2023 holiday season. Inflation, say experts, is projected to moderate, but the total value of retail sales will grow at a slower pace this year.
- As we approach the holiday season, retailers are buoyed by improving consumer sentiment and a narrowly averted UPS strike. Yet, they are cautious about the impacts of inflation and the resumption of student loan debt repayments.
- Inflation appears to be cooling, but it's not over yet. In August, the Consumer Price Index increased by 0.6%, a hike partially attributed to the surge in gas and shelter costs[1].
- The Supreme Court's striking down of President Biden's student loan forgiveness plan in June means borrowers earning less than $125,000 will no longer be relieved of up to $20,000 in student debt[2]. With loan repayments set to resume this fall, consumers could find themselves paying approximately $300 per month[2]. This could lead to reduced discretionary spending and impact categories like home goods and clothing, as suggested by GlobalData research.
In summary, while holiday sales are expected to grow moderately this year, the impact of inflation, student loan debt repayments, and changes in consumer behavior will play crucial roles in shaping retail trends.
[1] U.S. Bureau of Labor Statistics – Consumer Price Index[2] Earnest Analytics – Student Loan Repayment Analysis[3] Adobe – 2024 Holiday Spending Forecast
- Despite the moderating economy and the anticipated growth in holiday retail sales, inflation remains a significant concern for consumers and businesses alike.
- As the pandemic subsides, research indicates that the labor market is poised for continued growth, which could drive consumer spending during the holiday season.
- The trend towards increased e-commerce sales is expected to continue, as AI and finance-driven technologies make online shopping more convenient and accessible.
- Health experts, economists, and researchers suggest that the resumption of student loan debt repayments could potentially lead to reduced discretionary spending, especially in categories like home goods and clothing.