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NRF Predicts Happy Holidays for Retailers
Holiday sales could rise more than 5 percent this season, but the rising number of new COVID-19 cases remains a threat.
Holiday sales are expected to increase between 3.6 to 5.2 percent year-over-year to $755.3 billion and $766.7 billion, as per the National Retail Federation.
New York—The National Retail Federation’s forecast for the holiday season is merry and bright.
Holiday sales are expected to increase between 3.6 to 5.2 percent year-over-year to $755.3 billion and $766.7 billion.
Sales were up 4 percent last year to $729.1 billion while average holiday sales have increased 3.5 percent over the past five years.
The NRF defines the holiday season as Nov. 1 through Dec. 31.
The forecast usually comes out in October, but the trade organization said it needed more time to work through the uncertainties in the current climate, taking into consideration the COVID-19 pandemic coupled with social unrest.
“Our outlook for the holiday season is very bright,” NRF CEO Matthew Shay said on a call about holiday sales Monday.
Shay opened the call by acknowledging the emphasis retailers have put on health and safety to protect employees, customers, and the communities they serve.
He also noted retailers kicked the holiday season into high gear earlier than usual this year, beginning in October.
Retailers are expected to hire between 475,000 and 575,000 seasonal workers during the holiday season, compared with 562,000 last year.
The NRF noted some of the hiring may have been pulled forward into October since holiday preparation began earlier this year than in the past.
Consumers have responded positively to that earlier start, the NRF said.
From Mother’s Day to Thanksgiving, consumers have been looking for reasons to celebrate throughout the pandemic and are moving into “consumption mode” as the holidays approach, Shay said.
Shoppers and retailers alike have adapted to the situation at hand, he said, as retail sales have been positive over the last six months.
While that growth has not been distributed evenly across all retail categories, Shay noted, there was “tremendous momentum” heading into the second half of the year.
However, the pandemic brings with it uncertainty about consumers’ willingness to spend, said NRF Chief Economist Jack Kleinhenz.
“I can’t think of a period with so many simultaneous factors hitting the economy at once,” he said on the call.
However, as the economy improves, the ability to spend increases as well.
Kleinhenz highlighted rising home values, a strong stock market, and record savings bolstered by government stimulus payments.
Jobs and wages are growing while energy costs are low. Less money being spent on personal services, travel, and entertainment due to COVID-19 has left money on the table for retail spending.
This year, more of that money will be spent online, with online
and other non-store sales, which are included in the total, expected to increase between 20 percent and 30 percent to between $202.5 billion and $218.4 billion, up from $168.7 billion last year.
As for the weather, the National Weather Service is predicting cooler and wetter weather in the north and warmer and drier weather in the south, a combination that has previously signaled stronger retail holiday spending.
But the rising number of new COVID-19 cases is still a threat to consumers and the economy alike.
A tightening of restrictions in areas seeing a surge in new cases could mean another round of closures for non-essential businesses.
Shay said the store closures were a result of “arbitrary decision making” and “wreaked havoc on communities.”
“The entire framework in many cases was just flawed because the restrictions about which businesses could or should be open was based not on health and safety or the way they operated those businesses, but on the products sold by those retailers.”
“The problem is largely not what happens in stores, but outside of the stores.”
With a viable vaccine on the horizon, Shay and Kleinhenz both agreed it could translate into greater spending, even if consumers won’t see the benefits right away.
Shay recalled a tax reform measure signed a few days before Christmas 2017. The measure didn’t take effect until 2018 and no benefits would be seen until taxes were filed in 2019, but just the prospect of tax reform had a positive impact on consumer sentiment.
“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,” said Kleinhenz in a press release.
As for the weather, the National Weather Service is predicting cooler and wetter weather in the north and warmer and drier weather in the south, a combination that has previously signaled stronger retail holiday spending.
But the rising number of new COVID-19 cases is still a threat to consumers and the economy alike.
A tightening of restrictions in areas seeing a surge in new cases could mean another round of closures for non-essential businesses.
Shay said the store closures were a result of “arbitrary decision making” and “wreaked havoc on communities.”
“The entire framework in many cases was just flawed because the restrictions about which businesses could or should be open was based not on health and safety or the way they operated those businesses, but on the products sold by those retailers.”
“The problem is largely not what happens in stores, but outside of the stores.”
With a viable vaccine on the horizon, Shay and Kleinhenz both agreed it could translate into greater spending, even if consumers won’t see the benefits right away.
Shay recalled a tax reform measure signed a few days before Christmas 2017. The measure didn’t take effect until 2018 and no benefits would be seen until taxes were filed in 2019, but just the prospect of tax reform had a positive impact on consumer sentiment.
“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,” said Kleinhenz in a press release.
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