A person wears a face mask while carrying shopping bags in Columbus Circle on November 28, 2020 in New York City.
Noam Galai | Getty Images
Holiday sales could exceed even the rosiest expectations for the major shopping season, according to the National Retail Federation.
The major trade group’s economist, Jack Kleinhenz, said Friday that spending in November and December could grow as much as 11.5% compared with the same period a year ago — higher than many retail analysts and NRF itself had predicted.
The NRF had already called for a record holiday season, projecting in late October that sales would rise between 8.5% and 10.5% from last year. The group said it expected sales in November and December would hit an all-time high of between $834.4 billion and $859 billion. The sales forecast excludes spending at automobile dealers, gas stations and restaurants.
Last year, holiday sales rose 8.2% from 2019 to a record $777.3 billion, according to the NRF.
“People have the ability to spend and I think they are in the mood to spend,” Kleinhenz said in an interview. He pointed to strong balance sheets coming out of the pandemic, the low unemployment rate and the desire to reunite for holiday gatherings.
Kleinhenz acknowledged uncertain factors, including how consumers will react to the omicron variant and whether that may change how they shop and celebrate or what they may buy.
“There’s no crystal ball to provide a definitive answer, but the latest data is encouraging and provides useful insights,” he said in a news release. “In fact, the season could turn out even better than we expected.”
So far, this holiday season has had a different rhythm and unique challenges. Shoppers began buying gifts early because of concerns about product availability and shipping delays. Retailers worked to keep goods moving amid congested ports and truck driver shortages. And inflated prices on everything from materials to fuel means consumers are finding fewer deals whether they shop online or in stores.
That pulled forward a lot of spending into October and early November, stealing some of the thunder from major shopping holidays like Black Friday and Cyber Monday. The total number of shoppers and average spending dropped during the extended Thanksgiving weekend compared with each of the past two years, according to the NRF.
Kleinhenz said thinks shoppers will keep spending, even if they have already bought many gifts. “If you look If you look at what happened last November, we had an early October and we had a very, very strong November,” he said. “People are creatures of habit. There’s still a lot of time between now and the holidays.”
At least some of this season’s higher sales will come from inflation, which has raised the prices of many gift items from toys to electronics. Retailers, including Macy’s and Kohl’s, have also spoken about having reduced inventory and seeing higher consumer demand — which means they can sell more merchandise at full price and have little that winds up on the markdown rack.
On a call last week, NRF Chief Executive Matt Shay said omicron could actually boost retail sales this holiday. Instead of booking a trip or buying a gift card for a spa day, he said some of that experiential spending may shift back into goods.