U.S. holiday sales in 2023 are expected to rise at the slowest pace in five years, data from the National Retail Federation (NRF) showed on Thursday, as Americans grappling with sticky inflation think twice before splurging this shopping season.
The leading retail industry group said holiday sales, including e-commerce and non-store sales, would rise between 3% and 4% to $957.3 billion and $966.6 billion during November and December. This compares with a 5.4% rise last year and a 12.7% jump in 2021.
"In spite of the uncertainty, economy and challenges that households are facing, we have seen strength and resilience across the consumer sector. Certainly, there's been an evolution in the way consumers are allocating their dollars from month to month on their spending," NRF President and CEO Matthew Shay said.
Shoppers are taking calculated steps before spending during the all-important holiday season as high fuel and food prices, as well as student loan repayments, pressure household budgets and force customers to even curb some grocery purchases.
NRF's gloomy expectations for the two months echo a similar forecast from Deloitte that sees holiday sales in the United States rise at their slowest pace in five years as consumers prioritise purchases on a day-to-day requirement basis.
According to NRF, online and other non-store sales are expected to increase between 7% and 9% to a total of between $273.7 billion and $278.8 billion.
WEAK STORE TRAFFIC
The tepid forecast also comes as major retailers including Walmart (WMT.N) and Macy's (M.N) mark fewer visits at stores despite kicking off holiday promotions early again.
Retail analytics firm Sensormatic Solutions predicted footfall this holiday season would drop as much as 3.5% year-on-year.
Warmer weather also likely pinched in-store traffic.
In comparison, the Sensormatic data showed traffic remained flat in the 2022 holiday season, following a 17.2% surge in 2021 - when people rushed outdoors to make Christmas purchases after the lifting of COVID-19 restrictions.
Traffic fell for the two weeks starting Oct. 2 across top retail chains, Placer.ai data showed, despite the flurry of early holiday discounts such as Target's "Circle Week" promotions, Walmart's "Holiday Kickoff" and Kohl's three-day deals event that started on Oct. 9.
