Ready, set, shop.
The National Retail Federation pegs this holiday season’s retail sales growth at 8.5 percent to 10.5 percent, the trade group announced in Wednesday’s forecast gauging the November-December period. The season’s projected $843.4 billion to $859 billion haul, excluding auto, gas and restaurants, would mark a healthy increase over last year’s $777.3 billion tally, or 8.2 percent—a record at the time. Previous forecasts have called for growth in the 7-percent range.
Consumers are in a “very favorable position,” household fundamentals are “very, very strong,” and retail categories across the board are showing “very strong momentum,” NRF president Matthew Shay said. In an aboutface from 2020, last year’s underperformers like apparel and home furnishings are tracking favorably early in the season, he added. More than half (55 percent) of consumers in Bazaarvoice’s 6,000-person global survey said their spending will be on par with last year, while 15 percent earmarked an even bigger budget.
The Conference Board also sees a healthy holiday ahead. Published Wednesday, its annual Holiday Spending Survey expects consumers will average $648 in holiday gift spending, a slight dip from $673 last year. However, the survey found that consumers intend to shell out an addition $374 on seasonal purchases for a total tally on par with pre-pandemic spending.
Meanwhile, Anodot’s Researchscape consumer and retailer survey “reveals that as consumer spending is set to eclipse last year’s record numbers, retailers are under enormous pressure to deliver a seamless shopping experience amid rising concerns of supply chain disruptions.”
The autonomous business monitoring firm’s findings further noted that “[w]hile retailers are bullish about sales this season with 85 percent of survey respondents expecting to see a year-over-year increase in sales, 42 percent of them remained worried about supply chain disruptions having a negative impact on product inventory and timely deliveries.”
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Echoing the logistics concerns, Shay said “the pandemic didn’t so much create these problems in our supply chain” as much as it has made “more visible the threat of underinvestment in this country for many decades on a variety of infrastructure needs.” Retailers have been investing heavily to meet “exceptional consumer demand” and circumvent well-publicized bottlenecks, he added, pointing to the 26 million containers flowing into the U.S., a 20 percent increase over last year.
Consumers who have already started holiday shopping could “pull some sales out of November and December and into October,” said NRF chief economist Jack Kleinhenz, noting how simmering demand “outstrip[ed] inventories and current production” and drove an inflation-price hike mismatch.
“I think if retailers can keep merchandise on their shelves and it arrives for Christmas, this will be a stellar holiday season,” Kleinhenz said.
But given all the product delays and port problems plaguing the supply chain, consumers might take the easy street this season and opt for the low-stress solution: gift cards. The Conference Board’s survey sees gift cards in high demand this holiday, though apparel and footwear take the next spots for categories expected to drive the biggest increase in spending.
Digital shopping might also cool off from last year’s red-hot season. Just 42 percent of consumers plan to purchase at least half of their gifts online, down from 52 percent in 2020, and the first year-over-year decline in a decade, according to The Conference Board survey. However, the pandemic materially colored last year’s holiday, leaving many consumers—with no vaccine in sight—more comfortable with online shopping than visiting stores.
For contrast, NRF expects a $218.3 billion to $226.2 billion haul for online and other non-store sales, or growth of 11 percent to 15 percent. That would equal a strong bump from 2020’s $196.7 billion, though NRF’s projections last year estimated 20 to 30 percent growth, or $202.5 billion and $218.4 billion.
Merchants that sell online must nail the customer experience, according to Anodot, whose study found that 82 percent of surveyed consumer said a negative e-tail experience would turn them away from that merchant, “mostly likely into the arms of Amazon”—which “swallowed 51.2 percent of all online sales” last year. A full 55 percent of consumers named Amazon as their retailer of choice, with 48 percent of retailers surveyed naming the digital juggernaut as their largest competitor.
Retailers can leverage artificial intelligence-based solutions to address and enhance the customer experience, Anodot founder and CEO David Drai said, an even more urgent imperative with holiday dollars on the line.
“AI-based anomaly detection isn’t new to the business sphere, but traditionally has been relegated to technical performance,” Drai said. “As companies scale, they’re finding it imperative to automate the way they monitor the entire business, from customer experience to revenue and costs, so they can meet consumer expectations. This survey confirms the expanding role of AI in e-commerce today and the applications that are proving most valuable to the business.”
The season, as always, will bring throngs of new faces into stores and supply chain positions. NRF expects retailers will hire between 500,000 to 665,000 seasonal workers, versus the 486,000 onboarded last year. In addition, the National Oceanic and Atmospheric Administration’s outlook for a La Niña pattern of cooler and wetter weather in the north, and warmer and drier weather in the south, could fuel “stronger retail sales and could be a factor in 2021,” NRF said.