Spending Forecast to Grow 3%-4% Compared to Last Year
The National Retail Federation (NRF) predicts holiday shopping this year will see modest gains of 3%-4% over 2022, reaching total spending of $957-$967 billion. This pace of growth is in line with pre-pandemic levels from 2010-2019, when holiday spending increased an average of 3.6% annually.
After several years of heightened spending fueled by pandemic stimulus funds, consumers are returning to more typical holiday shopping habits. While still reaching record highs, this year’s predicted increase represents a slowdown compared to the last three years.
Moderate Growth Reflects the New Normal
“It is not surprising to see holiday sales growth returning to pre-pandemic levels,” said NRF President and CEO Matthew Shay. “Overall household finances remain in good shape and will continue to support consumers’ ability to spend.”
Online and non-store sales are expected to jump 7%-9% over 2022, totaling $274-$279 billion. This is up from $256 billion last year as e-commerce continues to grow.
NRF’s forecast considers employment, wages, consumer confidence, disposable income, credit, and past retail sales. It focuses on core retail sales, excluding autos, gas, and restaurants. The season is defined as November 1st through December 31st.
Consumers Remain Resilient
“Consumers remain the driver, resilient despite inflation, high gas prices, tight credit, and rising interest rates,” said NRF Chief Economist Jack Kleinhenz. “We expect spending to continue through the end of the year on various items and experiences, but at a slower pace. Solid job and wage growth will support holiday spending, and shoppers will look for deals to stretch their dollars.”
NRF expects retailers to hire 345,000-450,000 seasonal workers, similar to last year. Some hiring may have occurred in October to prepare for early holiday sales events.
According to FedEx CEO Raj Subramaniam, retailers have moved past destocking but haven’t started restocking yet. He also noted consumer spending on goods vs services is rebalancing after tilting heavily toward goods during the pandemic. The industrial economy remains weak in the U.S. and globally.
Bargain Hunting and Early Discounts
With inflation still high, bargain hunting and early discounts will be even more important this holiday season. Consumers have an appetite for deals and will start shopping well before Thanksgiving. This means retailers need strong holiday marketing campaigns ready now.
While the growth is slower than the pandemic-driven spikes, 2022’s projected holiday sales still represent a healthy increase. Consumers remain willing to spend on gifts, events, travel, and experiences. Their purchasing power supports merchants in having a profitable holiday season.
With the right strategies and savvy marketing, retailers can connect with shoppers looking to celebrate and spread holiday cheer, while keeping to moderate budgets. Engaging consumers early and providing value will be key.
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