Retailers could end up having a strong finish to 2020, despite all of the challenges that the coronavirus pandemic has dealt the industry, according to a new forecast that cites a strong stock market, rising home values and record personal savings rates as factors that could boost spending.
The National Retail Federation said Monday it expects holiday sales during November and Decemberto rise between 3.6 percent and 5.2 percent year over year, amounting to between $755.3 billion and $766.7 billion.
“Given the pandemic, there is uncertainty about consumers’ willingness to spend,” NRF Chief Economist Jack Kleinhenz said. “But with the economy improving, most have the ability to spend.”
With spending on travel and entertainment largely sidelined, consumers have more money to spend on other items, the group said.
Last year, holiday sales rose 4 percent to $729.1 billion, the NRF said. And holiday sales on average have increased 3.5 percent for the past five years. The sales forecast excludes automobile dealers, gas stations and restaurants.
Most shoppers may look to avoid crowded stores, which will shift more spending online, the group said. Retailers also have been urging shoppers to use services like curbside pickup to try to ease the stresses on their supply chains. The NRF is projecting a jump of between 20 percent and 30 percent in online and other non-store sales, amounting to between $202.5 billion and $218.4 billion this holiday season, compared with $168.7 billion in 2019.
“The outlook for the holiday season is very bright,” NRF President and CEO Matt Shay said during a call with members of the media. “We’ve seen consumers are very engaged [and] looking for opportunities to celebrate. … We expect a strong finish to the season.”
The forecast this year from the NRF, the industry’s leading trade group, was delayed by the uncertainty stemming from the coronavirus pandemic. Typically, the NRF releases its expectations in early October.
After the NRF report was released, shares of major retailers and mall owners rose. Investors have been anticipating consumers will soon be more comfortable retuning to malls and spending more money on apparel and accessories.
But with Black Friday just four days away, Americans’ anxiety about going to stores to shop remains heightened. More are planning to buy online, and they are checking items off their list earlier in the season. A survey from the NRF earlier this month found 42 percent of consumers had started their holiday shopping earlier this year than they normally do.
The possibility still remains that sales could be damaged by the spike in Covid-19 infections, however. Unemployment remains elevated, and some states have once again begun to shutter indoor dining, and roll out other restrictions that could result in additional furloughs or layoffs.