US Retailers Brace for Slowest Holiday Sales Growth Since 2018

Author: Thomas Cooper Updated: 09-12-2024 12:21 AM

US Retailers Anticipate a Challenging Holiday Season

As we approach the holiday season, U.S. retailers are bracing themselves for what is expected to be the slowest growth in holiday sales since 2018. Research from Deloitte indicates that consumers are becoming more frugal due to ongoing inflationary pressures and dwindling savings, leading to a cautious approach to spending during this crucial shopping period.

Forecasts Indicate Modest Growth

The report suggests that holiday retail sales are likely to increase between 2.3% and 3.3% from November 2024 to January 2025, reaching a cumulative total of up to $1.59 trillion. This is a noticeable decline from the previous year's growth rate of 4.3%, which amounted to $1.54 trillion

The Context of This Slowdown

Historically, holiday sales contribute significantly to the annual revenue of U.S. retailers, often accounting for more than half. However, this year presents unique challenges, including a shorter shopping window with only 27 days between Thanksgiving and Christmas. In response, retailers have begun implementing greater promotional discounts earlier, hoping to entice consumers.

Consumer Behavior Trends

The report highlights a concerning trend: consumers from all income brackets have experienced a decrease in personal savings, dropping to approximately 3.4%. This decline affects spending behavior, as shoppers are expected to seek out bargains earlier, especially in essential categories such as groceries and household goods.

The Rise of E-commerce Amidst Caution

Despite the overall slowdown in sales growth, e-commerce is forecasted to fare better, with projections indicating an increase of 7% to 9% during the holiday season, potentially bringing in up to $294 billion. This is a step down from the previous year's 10.1% growth, which amounted to $270 billion.

In-Store Sales Predictions

In-store sales, however, are expected to see a modest increase between 1.3% and 2.1%, totaling up to $1.3 trillion. This reflects a less robust performance compared to the previous year, which saw a growth of 3.1% to $1.27 trillion.

Expert Insights on Sales Drivers

Michael Jeschke, leader of Deloitte Consulting's Retail & Consumer Products, shared insights into the factors influencing this predicted sales performance. He noted that rising credit card debt and the potential depletion of pandemic-era savings are likely to restrict consumer spending compared to previous seasons. Despite these challenges, Jeschke emphasizes that e-commerce remains resilient, as consumers actively seek online deals to optimize their budgets.

Frequently Asked Questions

What is the expected growth rate for holiday sales this year?

Holiday sales are projected to grow between 2.3% and 3.3% this year.

How much will e-commerce sales increase this holiday season?

E-commerce sales are expected to rise between 7% and 9%, totaling up to $294 billion.

What challenges are retailers facing this holiday season?

Retailers are contending with reduced consumer savings and inflation, leading to a more cautious spending behavior.

How significant are holiday sales for retailers?

Holiday sales typically account for more than half of the annual revenue for U.S. retailers.

Are customers expected to shop in-store or online more this season?

While both in-store and e-commerce sales are expected to rise, online shopping is projected to show a stronger growth rate this season.

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