The National Retail Federation, the nation’s largest retail trade group, expects that holiday sales gain could shatter last year’s record-breaking season even as a snarled global supply chain slows the flow of goods and results in higher prices for a broad range of items.

 

What You Need To Know

  • The National Retail Federation expects that holiday sales gain in 2021 could shatter last year’s record-breaking season

  • Holiday sales increased 8.2% in 2020 compared with the previous year when shoppers, locked down during the early part of the pandemic, splurged on pajamas and home goods, mostly online

  • The NRF predicts that sales for the November and December period will grow between 8.5% and 10.5% to $843.4 billion and $859 billion

  • NRF executives acknowledged that there are plenty of headwinds facing consumers who are dealing with the ripple effects of a clogged supply chain that has meant higher prices, less generous discounts and shortages of items

 

The trade group said Wednesday that it predicts that sales for the November and December period will grow between 8.5% and 10.5% to $843.4 billion and $859 billion. Holiday sales increased 8.2% in 2020 compared with the previous year when shoppers, locked down during the early part of the pandemic, splurged on pajamas and home goods, mostly online.

The group expects that online and other non-store sales, which are included in the total, will increase between 11% and 15% to a total of between $218.3 billion and $226.2 billion driven by online purchases.

The numbers exclude automobile dealers, gasoline stations and restaurants billion. Holiday sales have averaged gains of 4.4% over the past five years, according to the group.

The forecast considers a variety of indicators including employment, wages, consumer confidence, disposable income, consumer credit, previous retail sales and weather.

“There is considerable momentum heading into the holiday shopping season,” NRF President and CEO Matthew Shay said. “Consumers are in a very favorable position going into the last few months of the year as income is rising and household balance sheets have never been stronger.”

Shay also noted during a call with the media on Wednesday that the lifting of U.S. restrictions on international visitors from more than 30 countries early next next month should also give a jolt to retailers this holiday season.

NRF’s rosy forecast is similar to other predictions, which call for holiday sales to increase by at least 7%, according to Deloitte, MastercardSpending Pulse and KPMG.

Still, NRF executives acknowledged on the call that there are plenty of headwinds facing consumers who are dealing with the ripple effects of a clogged supply chain that has meant higher prices, less generous discounts and shortages of items.

For example, online prices are up 3% heading into the holidays; in contrast, that number, on average, has been down 5% in past years, according to the Adobe Digital Economy Index, which tracks more than one trillion visits to U.S. retail sites. Adobe predicts that discounts will be in the 5% to 25% range across categories this season, compared to a historical average of 10% to 30%.

Just like last year, shoppers are shopping early for the holiday season for fear of not getting what they want. But Shay said that retailers are doing a good job in making sure inventory is on the shelves though there will be some gaps in some categories. Still, he has seen shoppers learn to adjust by switching to other brands and items if they can’t find their top choice. That happened in the early days of the pandemic when customers were looking for alternative consumer packaged brands when they couldn’t find their top choice.

“Consumer will not be deterred,” said Shay. ”They will be out shopping for the holidays, and they won’t go home empty-handed.”