National Retail Federation confident in forecast for record sales growth
The impact of the pandemic on the country’s economy will be a key factor in retail sales during the 2021 holiday season, but the National Retail Federation is nonetheless confident in its forecast for record growth, Jack Kleinhenz said today. , chief economist of the NRF.
“There are several factors that combine to have a major impact on the vacation outlook, but household fundamentals are a bright spot in the uncertain present,” Kleinhenz said. “Consumers are in a very favorable position at the start of the last few months of the year and spend because they can.”
Kleinhenz’s remarks came in the November issue of the NRF Monthly economic review, who developed the reasoning behind NRF forecasts Last week, 2021 holiday retail sales in November and December will increase 8.5% to 10.5% from 2020 to a total of between $ 843.4 billion and $ 859 billion. Even at the lower end of the forecast, it would be both the highest growth rate – surpassing last year’s 8.2% – and the highest total amount – beating $ 777.3 billion. from last year – never recorded.
The forecast excludes car dealerships, gas stations and restaurants to focus on core retail, but includes online sales, which are expected to increase 11% to 15% to $ 218.3 billion and $ 226.2 billion.
Kleinhenz said the pandemic raises the question of whether COVID-19 cases will continue their downward trend and whether this will increase consumer confidence and lead to increased spending. And if consumers spend more, will they continue to purchase retail products or will spending start shifting to services if they become more comfortable traveling, dining, or attending events? sports and entertainment?
The NRF’s forecasting model examines these factors along with disposable income, past retail sales, employment, wages, weather, energy prices, and other variables. Despite “complex mechanisms and forces at work,” the outlook is favorable for strong growth in retail sales this holiday season.
An estimated $ 2.5 trillion “savings buffer” accumulated by consumers who largely stayed at home rather than dining out or traveling during the pandemic has “supercharged” spending. Meanwhile, incomes are rising in the form of more jobs, more hours and higher wages reflecting business competition for workers during the current labor shortage. Household wealth hit a new record in the second quarter (latest data available) and boosted consumer confidence.
Spending continued at a strong pace throughout 2021 – up 14.5% year-on-year for the first nine months – and returned to pre-pandemic levels for many retail categories. While some people who lost their jobs last year still face financial difficulties, data collected by Harvard University shows spending by low-income consumers rose 22.3% at the end of September compared to January 2020 before the pandemic. This number seems to reflect the increase in unemployment benefits. and other stimulus funds like the new child tax credit.
Kleinhenz said strong income growth and “accumulated savings” should help spending weather inflation that has been driven by both consumer demand and supply chain disruptions. The challenge when – and if – sales start to decline will be whether the decline is caused by lower demand or reduced product availability.
Kleinhenz said higher gasoline prices and higher energy costs for home heating would divert some of the money that might otherwise go to retail sales, especially with meteorologists saying a La Niña model will likely bring cold weather this winter. Nonetheless, a La Niña has coincided with stronger retail sales in the past.
About the NRF
The National Retail Federation, the world’s largest retail association, is a passionate advocate for the people, brands, policies and ideas that help the retail business thrive. From its headquarters in Washington, DC, NRF empowers the industry that powers the economy. Retail is the nation’s largest private sector employer, contributing $ 3.9 trillion to annual GDP and supporting one in four jobs in the United States – 52 million American workers. For more than a century, NRF has been the voice of every retailer and every retail profession, educating, inspiring and communicating the powerful impact of retailing on local communities and global economies.