Holiday spending this season will likely set an all time record.
According to forecasts from the National Retail Federation (NRF), holiday sales in November and December will grow between 8.5% and 10.5% year over year and hit between $843.4 billion and $859 billion. This growth would shatter the previous record of all time growth at 8.2% in 2020 to $777.3 billion.
On the e-commerce front, Adobe is also predicting a season of record demand, with online sales expected to hit $207 billion. This would mark the first time that the online retail holiday season crosses $200 billion.
These numbers contrast grim predictions for shortages this holidays season that have dominated headlines over the last few months. Experts and executives have warned of the impact of supply chain headaches this season, predicting headwinds from port congestion, factory shutdowns and labor shortages that could last through 2023. In many cases, the implication is that certain brands and retailers will miss crucial inventory targets and leave consumers without options.
According to Adobe’s annual holiday forecast report, out-of-stock messages are up 172% this year compared to the pre-pandemic period of Jan. 2020 and up 360% compared to Jan. of 2019. Adobe predicts that the problem will worsen as the holidays near and create a season marked by empty shelves, out-of-stock product and fewer discounts.
According to Deloitte’s 36th annual Holiday Retail Survey, 75% of 4,315 polled U.S. consumers expressed concern about stock-outs, which has spurred them to complete shopping earlier than usual. 6 in 10 retail executives said they were concerned about not receiving holiday orders in time.
But thus far, these concerns are not reflected in sales numbers, which show record growth in spending. In September, U.S. retail sales grew 0.7% from August to $625.4 billion, according to a monthly report from the U.S. Census Bureau. Sales were up 13.9% compared to September 2020, with retail trade sales up 0.8% from August and 12.2% year over year.
In a call with reporters on Wednesday, NRF President and CEO Matthew Shay explained this discrepancy. While there may be shortages in multiple categories this season, consumers will still be largely motivated to keep shopping for replacement goods, he said. In other words, shortages won’t deter participation in spending, but will encourage exploration across new categories and brands.
NRF, which noted the impact of supply chain slowdowns on inventory, maintained optimism about the season overall.
“There is considerable momentum heading into the holiday shopping season,” said Shay in a release. “Consumers are in a very favorable position going into the last few months of the year as income is rising and household balance sheets have never been stronger. Retailers are making significant investments in their supply chains and spending heavily to ensure they have products on their shelves to meet this time of exceptional consumer demand.”