In its annual holiday forecast, Deloitte anticipates retail sales to increase between 1% and 1.5%, although the consulting firm admits that figuring out what might go on as 2020 ends is particularly uncertain.
Deloitte’s retail and distribution team has identified two possible scenarios for this holiday season, a relatively stable year-over-year sales result of flat to up 1% or a more 2.5% to 3.5% gain, both of which are lower than in years past and driven by a K-shaped recovery. The formal forecast increase, the 1% to 1.5% sales gain, comes from melding both scenarios, Deloitte maintained, which would generate retail revenues just around $1.15 trillion in the November to January timeframe.
In the first, lower-growth scenario, consumers could experience mounting anxieties related to both their finances and health generated by factors including expiration of the unemployment insurance benefit supplement, continued school closures, delay in development of an effective vaccine and an increase in unemployment numbers. Under those circumstances, Deloitte expects investment in savings, noting that the current savings rate is more than double what it was last year, at 17.8% in July versus 7.4% in 2019. In this scenario, consumers would reserve funds for non-discretionary items.
In the second, higher-growth scenario, consumer confidence would be increasing due to an effective federal pandemic relief bill with an unemployment insurance benefit supplement, and the creation of an effective vaccine. In that case, consumers who have dramatically cut costs related to travel and experiences might redirect dollars to holiday gift spending.
Rod Sides, vice chairman, Deloitte and U.S. retail and distribution sector leader, said, “Regardless of the scenario, the consumer’s focus on health, financial concerns and safety will result in a shift in the way they spend their holiday budget. For retailers, this holiday season will continue to push the boundaries on the importance of online, convenience, the role of the store and the criticalness of safe and speedy fulfillment.”