The National Retail Federation is predicting that retailers will set new sales records for the 2021 Christmas season.
The trade industry group expects sales in November and December to grow between 8.5 percent and 10.5 percent over 2020. If these numbers pan out, it would be all the more remarkable considering that retail sales for the last two months of 2020 grew 8.2 percent, setting the current percentage record. As a further point of comparison, the average annual increase in sales over the past five years has been 4.4 percent.
NRF expects that online and other non-store sales will grow at a faster rate than in-store, with gains in the 11 percent to 15 percent range. That said, the widespread distribution of COVID-19 vaccines across much of the country as well as safety lessons learned during the pandemic mean that more consumers will be shopping in stores this holiday season than they were in 2020.
“The outlook for the holiday season looks very bright,” said Jack Kleinhenz, NRF chief economist. “The unusual and beneficial position we find ourselves in is that households have increased spending vigorously throughout most of 2021 and remain with plenty of holiday purchasing power.”
Mr. Kleinhenz said that ultimate success for retailers will be tied to their inventory positions.
“Pandemic-related supply chain disruptions have caused shortages of merchandise and most of this year’s inflationary pressure,” he said. “With the prospect of consumers seeking to shop early, inventories may be pulled down sooner and shortages may develop in the later weeks of the shopping season. However, if retailers can keep merchandise on the shelves and merchandise arrives before Christmas, it could be a stellar holiday sales season.”
Other wild cards cited in NRF’s forecast are changes in the current transmission rate of the Delta variant, labor shortages and the weather.
NRF expects retailers to hire between 500,000 and 665,000 seasonal workers this year, up from 486,000 in 2020. A number of retailers began hiring earlier this year and encouraged consumers to shop early to avoid shipping delays and inventory shortages.
The weather forecast is favorable for merchants as the National Oceanic and Atmospheric Administration is predicting a La Niña weather event, which has been tied to stronger retail sales in the past.