The holiday season is approaching, and consumers are gearing up to spend more this year despite economic challenges like inflation. According to Deloitte’s 2024 Holiday Forecast, retail sales are projected to increase by 2.3% to 3.3%, marking a return to pre-pandemic spending levels.
Holiday Sales Growth Returns to Pre-Pandemic Trends
Deloitte analysts predict that this year’s holiday retail sales growth will return to normal patterns seen over the past decade, following the sharp increase in online shopping during the pandemic. “We expect slower growth compared to last year, with sales likely to increase between 2.3% and 3.3% this season,” said Akrur Barua, economist for Deloitte Insights. This is a slight decrease from the 4.3% growth seen during the 2023-2024 season.
Several factors are influencing consumer spending this year, including rising personal income and the end of pandemic-era savings. However, higher credit card debt is expected to weigh on consumer budgets as they enter the holiday shopping season.
Retail Sales Projections for the 2024 Holiday Season
Deloitte projects that overall holiday sales will reach between $1.58 trillion and $1.59 trillion during the November to January period. This compares to the $1.49 trillion in sales recorded during the same timeframe last year, according to the U.S. Census Bureau.
Additionally, e-commerce sales are expected to grow between 7% and 9%, bringing in $289 billion to $294 billion in revenue. Although this is slower than last year’s 10.1% growth, it still shows strong performance in online shopping.
Consumers Seek Deals as Holiday Shopping Begins
As inflation continues to impact consumer spending, shoppers are expected to hunt for deals, particularly online. Michael Jeschke, principal at Deloitte Consulting LLP, emphasized that building loyalty and trust with consumers will be crucial for retailers to succeed this holiday season.
A recent Bankrate survey revealed that nearly 48% of respondents plan to begin their holiday shopping by October, indicating an early start to the season.
Economic Factors Supporting Retail Sales Growth
Despite some economic concerns, steady personal income growth and a stable labor market are expected to support holiday retail sales. “While declining inflation may affect the nominal value of sales, it should boost consumers’ purchasing power through real wage growth,” said Barua. He added that the economy is trending toward long-term stability, with the labor market and household debt levels remaining favorable for steady retail growth.
With household financial assets having increased by 30% since late 2019, many consumers are in a good position to spend during the holiday season. As retailers prepare for the busy months ahead, they will need to focus on offering value to attract and retain budget-conscious shoppers.
This holiday season is shaping up to be a strong one, with both in-store and online shopping likely to see healthy growth. However, retailers must stay competitive by providing great deals and fostering customer loyalty to capitalize on the opportunity.
