Anticipated surge in holiday sales by 3.5%, according to Deloitte forecasts
Holiday Sales Slowdown Expected: A Look Ahead to 2023-2024
- The anticipated holiday sales growth for 2023-2024 is on the slower side, with retail sales projected to creep up between 3.5% and 4.6%, as per a Deloitte report. This compares to the 7.6% increase last year, reaching $1.49 trillion.
- The holiday sales period, from November 2023 to January 2024, is expected to total between $1.54 trillion and $1.56 trillion.
- E-commerce sales are envisioned to surge between 10.3% and 12.8%, pushing online sales up to between $278 billion and $284 billion.
Understanding the Trends
After a period of increased spending on services, that trend may start to cool off, while spending on durable goods remains high compared to pre-pandemic levels. Nick Handrinos, vice chair of Deloitte, highlighted that e-commerce sales could remain robust during the holiday season as consumers look for online deals to stretch their tight budgets.
Daniel Bachman, Deloitte's U.S. economic forecaster, noted that healthy employment and income growth would keep sales volumes growing, but the total value of retail sales will likely grow more slowly than last year due to inflation and a decreasing pool of pandemic savings.
Factors Affecting Retailers
As we approach the holiday season, retailers face favorable conditions such as improving consumer sentiment and a UPS strike that was narrowly avoided. The core concerns, however, revolve around inflation and the resumption of student loan debt repayments.
While inflation seems to be cooling down, the Consumer Price Index rose by 0.6% in August, primarily due to the escalating cost of gasoline and housing. The Supreme Court's recent decision to strike down President Biden's student loan forgiveness plan eliminates the possibility of borrowers forgiving up to $20,000 in student debt and could potentially force consumers to pay around $300 per month in loan repayments once payments resume this fall. This could significantly impact discretionary spending in categories such as home goods and clothing.
Takeaways
Though specific percentage growth rates for 2023-2024 holiday sales are yet to be detailed, available data suggests:
- Continued growth in retail sales into early 2025, driven by consumer behavior anticipating inflation.
- Increasing contribution of e-commerce to retail sales, setting records in 2024.
- A gradual return toward stable, moderate growth rates post-pandemic.
Overall, it's likely that 2023-2024 holiday sales experienced moderate growth, maintaining momentum relative to previous years’ steady growth following the volatile pandemic period.
- Despite the anticipated slower growth in retail sales for the 2023-2024 holiday season, e-commerce sales are projected to remain robust as consumers seek online deals to manage their tight budgets during the pandemic.
- According to Deloitte's research, total retail sales growth may slow down in 2023-2024 due to factors such as inflation and decreasing pandemic savings, while employment and income growth are expected to keep sales volumes growing.
- The resumption of student loan debt repayments and the escalating cost of necessities like gasoline and housing may impact discretionary spending in categories such as home goods and clothing, potentially influencing the economy and business overall.
- AI and finance professionals may want to closely monitor how consumers adjust their spending habits as they navigate economic challenges like inflation, labor market changes, and student loan repayments amidst the pandemic recovery, to better anticipate future market trends.
