Holiday Spending Forecast Is More Ho-Hum Than Ho-Ho-Ho

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While overall sales are expected to rise only 1%-1.5%, e-commerce could grow by 25%-35%

Retail sales during this year’s winter holidays are forecast to rise an anemic 1% to 1.5% over last year, with overall sales from November to early January totaling $1.147 trillion and $1.152 trillion, according to an annual forecast from Deloitte, a global audit, tax, consulting and advisory firm.

Continuing a recent trend, though, e-commerce holiday sales are expected to grow by robust double digits — 25% to 35% — over 2019, for a total of $182 billion to $196 billion. By comparison, e-commerce sales were up 14.% in 2019 over 2018.

“The lower projected holiday growth this season is not surprising given the state of the economy. While high unemployment and economic anxiety will weigh on overall retail sales this holiday season, reduced spending on pandemic-sensitive services, such as restaurants and travel, may help bolster retail holiday sales somewhat,” says Daniel Bachman, Deloitte’s U.S. economic forecaster, said in a Sept. 15 news release. “E-commerce is likely to be a big winner because consumers have shown a clear movement toward buying online rather than at brick-and-mortar stores.”

In issuing its annual forecast, Deloitte notes that “the upcoming holiday season will be marked by unparalleled uncertainty” — and explains that it considered two possible scenarios when creating its forecast. In the first model, concerns about the novel coronavirus pandemic and the sluggish economy would keep sales virtually flat (0% to 1%). In the second, Deloitte posits a K-shaped economic recovery, in which parts of the economy rebound while others continue to slide. That second scenario would boost holiday sales 2.5% to 3.5%. The final Deloitte forecast blends the two possibilities.

“Regardless of the scenario, however, the consumer’s focus on health, financial concerns and safety will result in a shift in the way they spend their holiday budget,” says Rod Sides, vice chairman of Deloitte LLP, and U.S. retail and distribution sector leader. “For retailers, this holiday season will continue to push the boundaries on the importance of online, convenience, the role of the store, and the criticalness of safe and speedy fulfillment.”

Last year, retail holiday sales grew 4.1%, totaling nearly $1.14 trillion.