NRF’s holiday sales forecast is optimistic, amid economic concerns
Amid many economic concerns looming, including things like inflation, still-high gas prices, and moderating consumer demand, the 2022 holiday shopping season has what really can’t be. seen only as an optimistic outlook.
That was the word from the Washington, DC-based National Retail Federation (NRF) yesterday (November 3) when the organization released its sales forecast for the 2022 holiday season.
NRF defines holiday sales as sales made between November 1 and December 31, excluding car dealerships, gas stations and restaurants, to focus on core retail.
The holiday sales forecast numbers are encouraging, with NRF forecasting holiday retail sales to grow 6% to 8% annually to between $942.6 billion and $960.4 billion. In 2021, retail sales increased 13.5% from 2020, likely due to the timing of the pandemic in 2020, to $899.3 billion, setting a new all-time high. Additionally, he said that over the past 10 years, holiday retail sales have seen an average increase of 4.9%, with the caveat that pandemic-related spending over the past two years accounted for a large portion of these gains.
Unsurprisingly, NRF said it expects e-commerce to play a big role in holiday sales in 2022, with online and other non-store sales expected to grow between 10% and 12%, ranging between $262.8 billion and $267.6 billion, ahead of the 2021 total of $238.9 billion. Which NRF said was largely driven by consumer e-commerce activity in the purchase of holiday products, while adding that households are likely to shift some holiday purchases towards in-store shopping and what they call a more traditional holiday shopping experience.
On a conference call with media, NRF President and CEO Matthew Shay described 2022 as another historic year for retail and for consumers amid challenging economic conditions, as about high levels of inflation and rising interest rates, which play a role in how consumers behave.
“In the face of these challenges and the uncertainty in the economy, consumers are taking things a little more thoughtfully and cautiously but…continue to spend on household priorities,” he said. “The fact that they continue to spend makes sense, considering what’s happening in the job market, job growth, rising wages and how consumers make up for the difference in their spending. monthly payments and income by dipping into savings and, in some cases, taking out additional credits and debts.
Additionally, Shay highlighted how retail sales since May 2020, 60 days into the pandemic, showed that consumers are steadily driving the economy forward. Going further, he said that in the first nine months of 2022, retail sales grew 7.2% annually, which is in line with NRF’s forecast for calendar year 2022 of a growth of 6% to 8%.
He added that consumers are looking for discounts, offers and value to stretch their dollars in the face of rising energy prices and housing prices, adding that this is expected to continue into the holiday season, consumers looking for bargains and values as the season begins in earnest.
Addressing NRF’s forecast for the holiday season, Shay said that over the past decade consumers have been in the market earlier than ever as the holiday season drags into the fall, retailers finding ways to meet consumer expectations and deliver value.
NRF chief economist Jack Kleinhenz said on the call that a variety of factors are taken into consideration when looking at the major factors influencing consumer spending and retail sales, including wages, past retail sales and consumer credit.
“Overall, we are generally very confident that consumer fundamentals will continue to support economic activity despite record levels of inflation and rising interest rates,” he said. “And even to the extent that there has been a low level of confidence, consumers have been consistent in their spending. We saw it last week, with third-quarter GDP up 2.6% annually after two quarters of contraction. This should outweigh any fear, at this time, that the economy is in recession. We expect the economy to grow for the remainder of 2022, but at a slower pace than seen in the third quarter. Consumers are worried about inflation—it’s their primary concern—but they still have the ability to spend. This was supported by job growth, rising wages and the tapping of savings.
He added that while there is still some uncertainty, the labor market is progressing quite well, with labor market strength really fueling retail spending, amid inflation. And he added that the demand for labor remains strong.
“While there is turnover, workers are able, in a very short time, to find a new job,” he said. “There is no indication so far that we are seeing a resumption of layoffs, and we expect job creation to tend to offset any decline in spending.”
If there was any doubt that the number of holiday spenders would be down this year, due to the aforementioned factors cited, the NRF forecast helps to allay those notions. Times are tough, no doubt, but the resilient strength of consumer spending continues to lead the way for economic growth.
About the Author
Jeff Berman, Group News Editor Jeff Berman is Group News Editor for Logistics management, Modern material handlingand Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine where he covers all aspects of the supply chain, logistics, freight forwarding and material handling industries on a daily basis. Contact Jeff Berman