The National Retail Federation just released its annual holiday retail spending forecast.
Washington, D.C.—The National Retail Federation is expecting a merry holiday season for retailers, though sales growth will slow compared with last year.
The organization’s annual forecast said winter holiday spending is expected to grow between 2.5 and 3.5 percent year-over-year.
Holiday retail sales are expected to reach between $979.5 billion and $989 billion, the NRF announced during its annual holiday sales forecast media call on Tuesday.
It’s a slowdown in growth compared with 2023, when holiday spending was up 4 percent to $955.6 billion.
The NRF defines the holiday season as Nov. 1 through Dec. 31, and focuses on core retail, excluding automobile dealers, gasoline stations, and restaurants.
A look at holiday retail sales through the years
“The economy remains fundamentally healthy and continues to maintain its momentum heading into the final months of the year,” said NRF President and CEO Matthew Shay in a statement.
“The winter holidays are an important tradition to American families, and their capacity to spend will continue to be supported by a strong job market and wage growth.”
On the call, Shay noted that the economy has been in a good place this year, operating with solid footing, and said going into the holiday season, consumers are continuing to show resilience and strength in spending.
The holiday forecast is consistent with the NRF’s forecast that annual sales for 2024 will be between 2.5 percent and 3.5 percent over 2023.
Holiday sales in November and December have averaged about 19 percent of total retail sales over the last five years, said the NRF, though it can be higher for some retailers.
Online and other non-store sales, which are included in the total, are expected to increase between 8 and 9 percent to a total of between $295.1 billion and $297.9 billion.
Last year, non-store sales were up 11 percent year-over-year to $273.3 billion.
The recent Adobe report mentioned the use of generative AI this season, a topic Shay also addressed.
Generative AI is a type of artificial intelligence that can create new content, including text, images, videos, and audio. Shoppers may be most familiar with ChatGPT or image generator DALL-E.
He highlighted retailers’ ability to use the technology to serve customers in a more effective way this holiday season.
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On the call, NRF Chief Economist Jack Kleinhenz noted that the NRF’s forecast may differ from other organizations due to varying definitions of the holiday season and its exclusion of non-core retail.
When comparing this holiday season to last year’s, the NRF stressed a difference in the length of the seasons.
This year, the period between Thanksgiving and Christmas will be six days shorter, totaling 26 days.
Shay noted that the shipping season will be shorter as a result, which impacts logistics, inventory management, and distribution.
Several factors are expected to play a role in the upcoming holiday season, including the election, inflation, and the aftermath of recent hurricanes.
As for the economic impacts of Hurricanes Helene and Milton, it may be too early to calculate the effect on retail spending.
For those consumers directly affected, said Kleinhenz, spending may shift to replacing the essentials, like home furnishing and electronics.
The upcoming U.S. presidential election is also a factor, but “it is nearly impossible to measure its impact on current or future spending,” said the NRF.
Inflation has continued to generate anxiety for consumers and retailers alike, said Kleinhenz, but added, “households have demonstrated their capacity to spend, despite the cumulative effect of inflation.”
In preparation for the holiday season, retailers are expected to hire 400,000 to 500,000 seasonal workers, compared with 509,000 last year.
The NRF noted that some of this hiring may have been pulled into October due to holiday buying events, like the recent Amazon Prime days.
Shay added that because many retailers are already well-staffed, the need for seasonal workers may be lower.
The NRF expects to share more data about the holiday season on Tuesday, Dec. 3, following Cyber Monday.
