2023 Holiday Shopping Season: A Unique Landscape

This year’s holiday shopping season unfolds against a backdrop of unusual circumstances: a heated presidential election, economic uncertainty, and persistent inflation. Despite these challenges, retail sales are anticipated to be surprisingly normal.

According to the National Retail Federation (NRF), holiday sales are projected to grow between 2.5% and 3.5% compared to last year, potentially reaching a staggering $989 billion. While this growth rate is slightly slower than the 3.8% increase seen in 2022, it aligns closely with the 3.6% average annual growth observed in the years preceding the Covid pandemic, which drastically altered consumer shopping behavior.

Matthew Shay, the chief executive of the NRF, noted that the current economic climate resembles a pre-pandemic environment in terms of spending patterns and growth trajectories. The NRF defines the holiday season as spanning from November 1 to December 31, excluding purchases from auto dealers, gasoline stations, and restaurants.

In a notable trend, e-commerce sales are anticipated to outpace overall retail sales growth, with estimates suggesting an increase of 8% to 9%, translating to approximately $295 billion to $298 billion in online sales.

Although consumers are still grappling with higher prices and experiencing sticker shock while shopping, the labor market remains unexpectedly robust. Wage growth has successfully outstripped inflation, enabling consumers to maintain their spending habits, albeit with a shift in focus from discretionary items and dining out to essential goods like groceries.

Mr. Shay emphasized that consumers are likely to adopt a price-conscious and pragmatic approach during this holiday shopping season, which is crucial for the survival and success of many retailers. He remarked, “Many consumers do have those interest rates and the lingering inflation of some categories on their mind. Therefore, we anticipate a highly promotional environment this holiday season.”