National Retail Federation Forecasts 8 Percent Holiday Sales Growth

The National Retail Federation is forecasting holiday retail spending to grow 6 to 8 percent this year reaching up to $960 billion as many shoppers dip into savings or use credit cards to buy gifts for loved ones.

“Our expectation is that we will have positive real [inflation-adjusted growth] for the holiday season,” association spokeswoman Mary McGinty told The Epoch Times. “We don’t have an inflation-adjusted holiday sales number because we don’t know exactly where inflation will end up in the next couple of months.”

Inflation continues to linger above 8 percent as holiday shoppers buy gifts. This means consumers will pay more for many goods and services during the holiday season.

Retail spending is expected to grow despite the bloated price tags, however, because low- and middle-income consumers are tapping into their savings and credit to continue buying goods, CEO Matthew Shay said during a telephonic press conference Nov. 3.

“I think that’s why we’re seeing real growth, even in the face of these challenges,” he said.

Consumers are also behaving more thoughtfully and cautiously, according to Shay. As a result, holiday shoppers will look for values this year in discounts and deals, he added.

Spending by higher-income shoppers remains robust, even in the face of challenges. Lower- and middle-income consumers are feeling the most pressure from inflation and are focusing on necessities, according to the retail association. That is expected to impact gift-giving and other expenses.

Despite higher prices, consumers are still expected to increase purchasing between Nov. 1 and the end of the year compared to 2021, the National Retail Federation reported Nov. 3.

“Still, consumers plan to spend $832.84 on average on gifts and holiday items such as decorations and food, in line with the average for the last 10 years,” according to the forecast.

Last year, U.S. consumers spent $889 billion during the holiday season, which was a 13.5-percent increase over 2020 spending.

Inflation is also impacting holiday shopping in other ways, the national retail group reported.

Given consumer concerns about the economy, 46 percent said they planned to browse or buy before November, according to the association’s annual survey conducted by Prosper Insights & Analytics.

Shoppers are also looking for discounts and deals as they cope with higher prices this holiday season, the retail experts said.

Online sales spending is expected to increase from 10 to 12 percent, reaching between $262.8 billion and $267.6 billion, according to the association. Last year, shoppers spent $238.9 billion online as they turned to online delivery services during the COVID-19 pandemic.

“While e-commerce will remain important, households are also expected to shift back to in-store shopping and a more traditional holiday shopping experience,” according to NFR.

However, retailers are prepared to deliver great value this year and consumers continue to be emotionally invested in the holidays, according to Shay.

“We think we’re in a good position to meet consumer demand to deliver a very healthy holiday season,” Shay said.

Holiday hiring and travel are also expected to increase this year, according to the association’s Chief Economist Jack Kleinhenz.

The forecast was more optimistic than the holiday sales numbers projected by Deloitte, a national auditing and consulting tax firm.

Delloitte forecasted holiday retail sales to increase between 4–6 percent. Overall, the firm expects retail and consumer product sales to total $1.45 to $1.47 billion this year.

Deloitte also expects e-commerce sales to grow by 12.8 to 14.3 percent during the same time last year, reaching up to $264 billion.

“The lower projected growth for the 2022 holiday season reflects the slowdown in the economy this year,” Deloitte’s U.S. economic forecaster Daniel Bachman said in a September statement. “Retail sales are likely to be further affected by declining demand for durable consumer goods, which had been the centerpiece of pandemic spending.”

The company anticipates more spending on consumer services, such as restaurants, as the pandemic wanes.

“Inflation will also help to raise dollar sales, although retailers will see less growth in sales volume,” Bachman added.

Holiday shoppers are also expected to seek discounts and online deals as they cope with inflation, Deloitte’s vice president of U.S. retail, wholesale, and distribution and consumer products leader Nick Handrinos reported.

“As inflation weighs on consumer demand, we can expect consumers to continue to shift how they spend their holiday budget this upcoming season,” Handrinos said. “Retail sales are set to increase as a result of higher prices, and this dynamic has the potential to further drive e-commerce sales as consumers look for online deals to maximize their spending.”