Dec. 3, 2020 — Following its recent announcement that retail sales are rebounding, the National Retail Federation (NRF) has shared its holiday sales outlook, forecasting that holiday sales during November and December will increase between 3.6 and 5.2% over 2019 to a total between $755.3 billion and $766.7 billion. This forecast, which excludes auto dealers, gas stations, and restaurants, compares with a 4% increase to $729.1 billion last year and an average holiday sales increase of 3.5% over the past five years.
“We know this holiday season will be unlike any other, and retailers have planned ahead by investing billions of dollars to ensure the health and safety of their employees and customers,” says NRF President and CEO Matthew Shay. “Consumers have shown they are excited about the holidays and are willing to spend on gifts that lift the spirits of family and friends after such a challenging year. We expect a strong finish to the holiday season, and will continue to work with municipal and state officials to keep retailers open and the economy moving forward at this critical time.”
NRF forecasts that online and other non-store sales, which are included in the total, will increase between 20 and 30% to between $202.5 billion and $218.4 billion, up from $168.7 billion last year.
“Given the pandemic, there is uncertainty about consumers’ willingness to spend, but with the economy improving, most have the ability to spend,” NRF Chief Economist Jack Kleinhenz says. “Consumers have experienced a difficult year, but will likely spend more than anyone would have expected just a few months ago. After all they’ve been through, we think there’s going to be a psychological factor that they owe it to themselves and their families to have a better-than-normal holiday. There are risks to the economy if the virus continues to spread, but as long as consumers remain confident and upbeat, they will spend for the holiday season.”
Kleinhenz shares that households have strong balance sheets supported by a strong stock market, rising home values, and record savings boosted by government stimulus payments issued earlier this year. In addition, jobs and wages are growing, energy costs are low, and reduced spending on personal services, travel, and entertainment because of Covid-19 has freed up money for retail spending, shares the NRF.
Because of shutdowns and stay-at-home orders due to Covid-19, not all retailers and categories have rebounded as quickly, including small and mid-sized retailers. However, in the aggregate retail sales have seen a V-shaped recovery, growing both month-over-month and year-over-year each month since June.
The NRF calculated that sales were up 10.6% in October versus October 2019, likely driven in part by early holiday shopping. For the first 10 months of this year, retail sales were up 6.4% versus the first 10 months of 2019.
The organization also shares that e-commerce sales are up 36.7% year-over-year during the third quarter, and many households are expected to depend on digital shopping for holiday purchases, similar to everyday spending this year. This includes websites operated by bricks-and-mortar retailers, which have become major players in the online market as retail channels have merged.
On the topic of weather and its affect on holiday sales, Kleinhenz shares that the National Weather Service’s forecast of cooler and wetter weather in the north and warmer and drier weather in the south has correlated with stronger holiday spending in the past, and could be a factor in 2020.
NRF’s “New Holiday Traditions” campaign encourages consumers to shop safely and early amid the pandemic, and 59% had begun by early November, up from 49% at that point a decade ago.
Find additional information on NRF’s Winter Holidays page.