For the upcoming holiday season, the National Retail Federation is forecasting that sales will reach record levels during November and December, growing between 3% and 4% versus the 2022 period and reaching between $957.3 billion and $966.6 billion total.
Despite a slower growth rate compared with the past three holiday seasons, when stimulus payments related to the Covid-19 pandemic led to unprecedented rates of retail spending, this year’s November/December consumer spending number is consistent with the average annual holiday increase of 3.6% from 2010 to 2019, NRF pointed out.
The pandemic not only resulted in a spending boost but also helped shift more shopping activity online. NRF anticipates digital and other non-store sales, which are included in the total, to increase between 7% and 9% to reach between $273.7 billion and $278.8 billion, up from $255.8 billion last year.
A particular factor that could affect retail sales in the 2023 holiday season is weather, NRF stated, given that a significant El Nino event has been underway. The effects of El Nino in the United States tend to be stronger in the cooler months, according to the National Weather Service. Moderate to strong El Nino conditions during the fall and winter often result in wetter-than-average conditions from southern California to the Gulf Coast and drier-than-average conditions in the Pacific Northwest and Ohio Valley. El Nino winters also generally drive warmer-than-average temperatures across the northern tier of the country. In an October 12 update, the NWS stated that it’s likely that El Niño will continue through the Northern Hemisphere spring.
To meet holiday season demand, NRF expects retailers will hire between 345,000 and 450,000 workers, in line with 391,000 seasonal hires in 2022. Some of this hiring may have been pulled into October to support holiday buying events retailers launched in October.
NRF’s holiday forecast is based on economic modeling that considers indicators such as employment, wages, consumer confidence, disposable income, consumer credit and previous retail sales. Its calculation excludes activity among automobile dealers, gasoline stations and restaurants to focus on core retail.
In separate research, a holiday survey conducted for NRF by Prosper Insights & Analytics indicated that 43% of holiday shoppers planned to start making purchases before November. The survey also found that consumers planned to spend $875 on core holiday items including gifts, decorations, food and other holiday-related purchases this year.
