In a complex retail marketplace roiled by the COVID-19 pandemic, the National Retail Federation forecast that sales in the November and December holiday season will gain between 3.6% and 5.2% this year versus the 2019 period to a total between $755.3 billion and $766.7 billion.
The forecast numbers, which exclude automobile dealers, gasoline stations and restaurants, compare with a 4% increase to $729.1 billion in the previous holiday season and an average holiday sales increase of 3.5% over the past five years.
NRF expects online and other non-store sales, which are included in the total, will increase between 20% and 30% to between $202.5 billion and $218.4 billion.
“We know this holiday season will be unlike any other, and retailers have planned ahead by investing billions of dollars to ensure the health and safety of their employees and customers,” said NRF president and CEO Matthew Shay. “Consumers have shown they are excited about the holidays and are willing to spend on gifts that lift the spirits of family and friends after such a challenging year. We expect a strong finish to the holiday season, and will continue to work with municipal and state officials to keep retailers open and the economy moving forward at this critical time.”
In a conference call, Shay said that, in the past, the potential of a positive development, such as higher tax returns due to new legislation, has helped holiday spending. As such, the prospect of a COVID-19 vaccine could encourage consumers to have a better outlook during the holidays and a willingness to spend in the season.
NRF chief economist Jack Kleinhenz said in the conference call that the holidays arrive with a number of factors that could boost seasonal sales. A desire to celebrate after a hard year could prompt additional spending as can rising wages. In general, consumers have a better balance sheet with less debt and more savings, they are spending less on fuel both for their cars and, at least for the moment, home on a year-over-year price basis, and recognize that real estate values remain solid. Still, uncertainty over factors such as the prospects for a stimulus and increasing coronavirus cases with their potential impact on employment prospects “could set the recovery in reverse.”
Despite the uncertainty related to the pandemic and the consumer willingness to part from cash, Kleinhenz pointed out that, “with the economy improving, most have the ability to spend. Consumers have experienced a difficult year but will likely spend more than anyone would have expected just a few months ago. After all they’ve been through, we think there’s going to be a psychological factor that they owe it to themselves and their families to have a better-than-normal holiday. There are risks to the economy if the virus continues to spread, but as long as consumers remain confident and upbeat, they will spend for the holiday season.”