Sharp slowdown in retail growth seen for the holidays
Retail sales in the United States are forecast to increase 6.7% for the holiday shopping season from November to December, a sharp slowdown from the 14% growth seen year-to-date through ‘in September.
This is according to Customer Growth Partners, which also reports that the 6.7% gain in sales from the 2021 holidays is lower than the 7.7% sales increase seen during the 2020 holidays, and is lagging behind by compared to CGP’s forecast for the year 2021 of sales growth of 11.9%.
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The CGP estimates that vacation sales in 2021 will hit a record $ 813 billion, up from $ 762 billion in 2020.
“After growing in the stratosphere for almost a year, consumer spending is starting to stabilize at ‘near normal’ rates,” said Craig Johnson, president of CGP, a research and consulting firm. “However, the deceleration from the dizzying double-digit growth of 2021 since the start of the year is due to rising energy prices, widespread inflation and supply chain challenges – All mitigating but not completely offsetting otherwise healthy consumer fundamentals.
“Over two years,” said Johnson, “the recovery in retail is exceptional, with vacation spending in 2021 up 15% from 2019’s $ 707 billion pace – a record at the time Nonetheless, the slower pace of growth shows the marked effects of inflation in general, and energy prices in particular, which are expected to remove some $ 46 billion from discretionary spending over the holiday period, gasoline. “alone expected to subsume some $ 35 billion. Supply chain challenges will reduce vacation spending by at least $ 10 billion, with some demand postponed to October or delayed into January.” from CGP cover all retail sales except automobiles, gasoline and restaurants.
CGP’s forecasts are less optimistic than others. Last month, AlixPartners forecast a 10-13% increase from last year’s holiday season in the United States, making 2021 the strongest holiday season since 1999. Mastercard Spending Pulse reported that US retail sales are forecast to increase 7.4% excluding automobiles and gasoline. And KPMG expects holiday sales to be 7% higher than last year.
The CGP predicted that growth will slow this fall, as comparisons become more difficult and spending on services picks up. “Labor shortages, supply chain bottlenecks and consumer resistance to rising prices are also headwinds during the holidays,” Johnson said. “The biggest uncertainties may be a rebound in COVID-19, as well as rising energy prices – every penny of increase at the pump takes $ 1.3 billion a month on retail spending. “
But Johnson also said higher energy costs, COVID-19 and supply chain challenges will be alleviated by increased disposable income – up 4.5% – from healthy household balance sheets, 500 billions of dollars in additional savings for consumers from 2020 and an increase in the “underground” economy cash – from weeds to lawn care – spending money but not showing up in the statistics.
Apparel and accessories will overtake other merchandise sectors for the first time this century, with “stellar” growth of 18% from sluggish sales in 2020, according to CGP.
In other forecasts, CGP said department stores will see their best holiday growth rate in decades – up 13% – but still lag behind their total sales compared to the 1990s, when the sector’s contraction accelerated.
Consumer electronics and home appliances will grow about 10% from last year, keeping pace with Apple’s new iPhone 13, updated iPad models and new laptops from all major brands.
Sporting goods, toys and hobby stores will also thrive, up 9%, “as households curl up return to normal leisure habits and hobbyists buy Michael’s, et al. Johnson reported.
E-commerce retailers will rise 7.7% to a record $ 194 billion.
“The past 18 months have provided a unique window into the resilience of the American consumer, the ingenuity of American retailers – and the underlying strength of the economy as a whole,” Johnson said. “Retail growth is slowing as we enter the fourth quarter of 2020, but we will still see record vacation spending. If the worst inflation fires abate over the new year and the supply chain rebalances by mid-year, we may well see a return to strong but sustainable growth at a figure for 2022. “
CGP bases its forecast on a two-decade ‘big data’ retail platform that tracks retail spending, nationwide field research at more than 100 leading business sites and a field sample of approximately 12,990 interceptions in malls and stores. The 18-member CGP field team conducts primary research weekly in more than 100 department stores nationwide.