Holiday spending expected to reach record levels
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Holiday spending in November and December is expected to grow between 3-4% over 2022 levels, reaching a new record, according to a forecast released Thursday by the National Retail Federation.
That increase will bring spending to more than $957 billion, which the NRF says is consistent with the average annual holiday increase of 3.6% that took place from 2010 to 2019 before the pandemic.
Rod Runyon, a professor of retailing at the White Lodging-J.W. Marriott, Jr. School of Hospitality and Tourism Management at Purdue University, also agrees with the NRF’s forecast that online spending is expected to rise again this year as well.
In an interview for the Associated Press, Runyon said the increase in online shopping is due to several factors.
“The first one is probably the fact that prices are going up. If online you can get a better deal, that’s great,” Runyon said. “Second part of that is logistics, and people aren’t necessarily sure when they go into a store if the selection is going to be there, so they might as well shop from home. And maybe the third thing is the proliferation of retail theft that we’ve been hearing about.”
Runyon noted that stores such as Target have been closing locations, primarily in urban areas, due to in-store theft, which creates a twofold issue for brick-and-mortar shopping.
“It causes them to have to raise prices, but in some cases it also makes consumers wary of going to the store,” he said. “And so all those things are part of what is driving people even more to online shopping.”
The NRF forecast is predicting online and other non-store sales will rise 7-9% for a total of more than $273 billion, up from $255 billion last year.
“Consumers remain in the driver’s seat, and are resilient despite headwinds of inflation, higher gas prices, stringent credit conditions and elevated interest rates,” NRF Chief Economist Jack Kleinhenz said in a news release. “We expect spending to continue through the end of the year on a range of items and experiences, but at a slower pace. Solid job and wage growth will be contributing factors this holiday season, and consumers will be looking for deals and discounts to stretch their dollars.”
The NRF expects retailers to hire up between 345,000 and 450,000 seasonal workers this year to meet the demand of the holiday season. That’s in line with the 391,000 seasonal hires made in 2022.
According to the latest NRF holiday survey, which is separate from the holiday sales forecast, 43% of holiday shoppers said they planned to begin making purchases before November.