Consumers are predicted to spend an additional $25 billion on holiday shopping in November and December compared to 2023, according to The National Retail Federation’s annual holiday forecast released on Tuesday.
According to NRF’s report, holiday sales could grow an estimated 2.5-3.5% to reach $990 billion in sales from November 1 to December 31, 2024. This is up from $964.4 billion spent in the last two months of 2023.
“Consumer spending has been rather stable, often characterized as resilient, but I would say a better adjective might be persistent,” said Jack Kleinhenz, chief economist at NRF, during a press conference Tuesday. “We’ve seen consumers continually support the overall economy throughout most of this year.”
For example, sales growth from January to August of this year was up 3.4% year-over-year. “I think we’ll see solid consumer spending continue,” Kleinhenz said. “Households have demonstrated their capacity to spend, certainly despite the cumulative effect of inflation and higher interest rates. [And] household finances are in relatively good shape and are certainly an impetus for strong spending into the holiday season.” Other signals for a strong shopping season include a 4.1% unemployment rate, he said.
Still, inflation continues to be a driving decision-maker among consumers, with more shoppers looking for price cuts and sales, according to NRF.
“I think we’ll see broader promotional activity now than last year,” said Matthew Shay, NRF president and CEO. That is, he expects more sweeping price cuts at big box retailers to fight consumer perception of inflation, and more targeted sales and promos around specialty and luxury goods. “[Promotions] will be more targeted and personalized for individual consumers based on needs and interests, and I think it will be broader across more brands and across more categories than we experienced a year ago,” he said.
Still, consumers have not slowed their spending on goods. “There’s a lot of money out there still,” said Shay, noting that NRF predicts shoppers moving seamlessly from in-store to app-based to e-commerce shopping. A specific bright spot will be an increase in digital shopping — NRF predicts digital sales could increase 8-9% year-over-year to reach $295.1 billion, up from $273.3 billion in 2023.
However, NRF issued e-commerce retailers a warning about the truncated shopping season due to Black Friday and Cyber Monday coming late this year — the latter falls on December 3. This shortens the average shopping season between BFCM and Christmas by six shopping (and shipping) days.
“[The shorter shipping window] has the potential to impact consumers’ expectations about convenience and their expectations that they can get something, if not in the next two hours, certainly in the next two days,” said Shay. “The shipping season will be shorter. It’ll be more compressed and compact, and that impacts the logistics of on-demand expectations, inventory management and distribution, and delivery and fulfillment. And that puts a premium on execution on the retailer side.”
NRF plans to release more data on December 3 around where, when and how shoppers are spending for the holidays.
