Retail Sales to Exceed $4.3T This Year If Vaccines Hold

Retail sales are anticipated to grow between 6.5 and 8.2% to more than $4.33 trillion in 2021 as vaccinations increase and the economy reopens, according to the National Retail Federation’s annual forecast. Online sales are included in that total and are expected to increase by between 18 and 23% to a potential high of $1.19 trillion.

NRF also predicts the overall economy will pick up between 220,000 and 300,000 jobs per month this year, a figure that’s dependent on economic momentum in the second and third quarters. Real GDP growth is expected between 4.5 and 5%, though NRF cautions that the pace of vaccine rollouts could dramatically impact overall numbers.

“The trajectory of the economy is predicated on the effectiveness of the vaccine and its distribution,” NRF Chief Economist Jack Kleinhenz said. “Our principal assumption is that the vaccination will be effective and permits accelerated growth during the mid-year. The economy is expected to see its fastest growth in over two decades.”

That recovery will be buoyed, Klenhenz says, by the second year of savings, sky-high stock valuations, low interest rates and enhanced government support, all of which impact consumer spending. And while consumers will still use retail goods, they’re also likely to turn to services, which normally account for 70% of consumer spending, when they can.

In 2020, retail sales grew 6.7% to $4.06 trillion, nearly double the NRF’s prior predictions of at least 3.5% growth. Those figures exclude auto dealers, gas stations, and restaurants, however—all of which have been particularly hard-hit by the pandemic. They do include e-commerce and non-store sales, which flew up 21.9% to $969.4 billion.

The holiday shopping season also accounted for nearly a fifth of overall retail sales in 2020, and sales during the period grew 8% in what NRF deemed an unexpected high. Non-store and online sales accounted for $206.9 billion of the $787.1 billion in sales over the November-December period, and increased 22.6% year over year.

 “Despite the continuing health and economic challenges COVID-19 presents, we are very optimistic that healthy consumer fundamentals, pent-up demand and widespread distribution of the vaccine will generate increased economic growth, retail sales and consumer spending,” NRF President and CEO Matthew Shay said. “From the outset of the pandemic, retailers have gone above and beyond even the most conservative safety guidelines to protect and serve their associates and consumers alike. Retailers are increasingly engaged in working with federal, state and local health officials to distribute and administer the vaccine. This partnership has been key to our economic health throughout the pandemic and will continue this year.”