Holiday Sales Expected to Increase by 3.6%

In a new forecast, the National Retail Federation predicts 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.

The 2020 projections, which exclude automobile dealers, gasoline stations and restaurants, are a 4% increase over the $729.1 billion posted last year. They’re 3.5 percent over the past five years.

Online sales will drive the surge in spending. 

NRF expects that online and other non-store sales will increase between 20% and 30% to between $202.5 billion and $218.4 billion, up from $168.7 billion last year.

During the third quarter, e-commerce sales were up 36.7% year-over-year. NRF expects many households to depend on digital shopping to make many of their holiday purchases, just as they have for much of their everyday spending this year. Included in online spending are websites operated by bricks-and-mortar retailers.

The shift to online shopping mirrors trends recorded in the latest Accenture Holiday Shopping Survey, which found that shoppers are minimizing in-store shopping and choosing home delivery. 

According to the survey, 76% of consumers want retailers to remain closed on Thanksgiving Day, and half of those respondents said retail workers deserved a day off. Another 61% of respondents in the survey said that they plan to minimize in-store shopping this year and that they would be most comfortable shopping in stores that show a high level of concern for health, safety and hygiene practices.

While many households are struggling during the COVID crisis, NRF Chief Economist Jack Kleinhenz said many 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. Jobs and wages are growing, energy costs are low and reduced spending on personal services, travel and entertainment because the virus has freed up money for retail spending.

While not all retailers have rebounded, NRF says retail sales in the aggregate have seen a V-shaped recovery, growing both month-over-month and year-over-year each month since June. Sales were up 10.6 percent in October versus October 2019, which NRF sales was likely driven in part by early holiday shopping. For the first 10 months of this year, retail sales were up 6.4 percent versus the first 10 months of 2019.