WASHINGTON — The National Retail Federation (NRF) has projected holiday retail sales in November and December — excluding automobiles, gasoline and restaurants — to increase between 4.3% and 4.8% over 2017 to $717.45 billion to $720.89 billion. The forecast compares with an average annual increase of 3.9% over the past five years.
“Our forecast reflects the overall strength of the industry,” said NRF president and chief executive officer Matthew Shay. “Thanks to a healthy economy and strong consumer confidence, we believe that this holiday season will continue to reflect the growth we’ve seen over the past year. While there is concern about the impacts of an escalating trade war, we are optimistic that the pace of economic activity will continue to increase through the end of the year.”
Holiday sales in 2017 totaled $687.87 billion, up 5.3% over the year before and the largest increase since the 5.2% year-over-year gain seen in 2010 after the end of the Great Recession.
“Last year’s strong results were thanks to growing wages, stronger employment and higher confidence, complemented by anticipation of tax cuts that led consumers to spend more than expected,” said NRF chief economist Jack Kleinhenz. “With this year’s forecast, we continue to see strong momentum from consumers as they do the heavy lifting in supporting our economy. The combination of increased job creation, improved wages, tamed inflation and an increase in net worth all provide the capacity and the confidence to spend.”
The holiday forecast is consistent with NRF’s forecast that annual retail sales for 2018 will increase at least 4.5% over 2017.
The forecast is based on an economic model using several indicators including consumer credit, disposable personal income and previous monthly retail sales. The number includes online and other non-store sales.
Even with the increasingly tight labor market, retailers have been preparing for their busiest season of the year by hiring extra staff to help meet the demand expected during November and December. As part of its forecast, NRF expects retailers to hire between 585,000 and 650,000 temporary workers this holiday season, up from last year’s 582,500.
For its part, the International Council of Shopping Centers (ICSC) forecasts that shoppers will spend $807 billion, an increase of 4.5% over last year, with $685 billion being spent on gifts and other holiday items and $122 billion on food and beverages.
Malls and shopping centers will, once again, be bustling with consumers this holiday season. According to ICSC, 84% of shoppers will visit a mall or shopping center throughout the holidays, but the retailers who embrace omnichannel will benefit the most. Of the 40% of consumers who will use click-and-collect, 82% expect to spend additional money at that store or tenant, further bolstering retail sales.
“Our annual Holiday Shopping Intentions Survey findings demonstrate that consumers remain confident in the economy,” said ICSC president and CEO Tom McGee. “Shoppers want a combination of convenience and experience, and the retailers with the best omnichannel strategy are poised for success this holiday season.”