U.S. holiday sales are expected to grow at the slowest pace since 2018 amid concerns that persistent inflation will wipe out consumer savings, according to a new survey.
Holiday retail sales are projected to grow 2.3% to 3.3% from November through January, totaling $1.6 trillion. According to Deloitte's annual holiday retail forecast.
That's a far cry from the 4.3% increase in retail sales during the same period last year, which totaled $1.5 trillion, according to the U.S. Census Bureau.
“Rising credit card debt and the possibility that many consumers have used up their pandemic-era savings will likely weigh on sales growth this season compared to last,” Akrul Baruah, an economist at Deloitte Insights, said in a statement.
Projections for the upcoming holiday season are in line with 2018's sales growth of 3.1%.
E-commerce sales are also expected to fall below last year's figures, but “sales should remain strong as consumers continue to turn to online transactions to maximise their spending,” Michael Jeschke, head of Deloitte's retail and consumer practice, said in a statement.
According to Deloitte, e-retailer sales are expected to increase 7% to 9% this holiday season, totaling $294 billion, down from last year's 10.1% increase, totaling $270 billion.
According to Reuters, in-store sales are expected to grow 1.3% to 2.1% to a total of $1.3 trillion, down from last year's 3.1% increase to just under $1.3 trillion.
Holiday sales typically account for more than half of annual revenue for U.S. retailers.
Retailers are already facing new challenges with this year's shortened holiday shopping season.
With just 27 days between Thanksgiving and Christmas, retailers are being pressured to promote discounts early in the season.
The pullback in holiday shopping by consumers with fewer savings will hit businesses hard, and consumers in general are saving less.
The U.S. personal savings rate fell to 3.4% in June from 3.5% in May, the lowest monthly rate since 2022. According to the U.S. Bureau of Economic Analysis.
The personal savings rate fell again in July to 2.9%. According to the BEA.
As a result, consumers are expected to start looking for deals early in the holiday season.
Cash-strapped customers are already adjusting their shopping habits to seek out value meals at fast-food restaurants, low-cost groceries at big box stores and cheaper items at fast-fashion retailers.
With post wire
