Holiday spending is expected to soar this year, hitting impressive new heights, as the National Retail Federation (NRF) predicts consumers will splurge between $979.5 billion and $989 billion. This figure, poised for growth, marks up to 3.5% increase from 2023—although it's worth noting this would be the slowest pace we've seen for holiday sales growth over the past six years.
This change means last year's holiday sales figures came to $955.6 billion after rising 3.9%, showcasing a consistent upward trend, albeit at a decelerated pace this time around. What’s fascinating is how e-commerce continues to lead this charge, credited as the major driver of retail growth heading toward the 2024 holiday season, according to NRF, the leading voice for the retail industry.
Online shopping's impact is significant, and expectations are high. It's estimated online and other non-store sales will account for approximately $295.1 billion to $297.9 billion of the total spending, up from last year's $273.3 billion. The holiday shopping window is also slightly modified this year; it totals only 26 days between Thanksgiving and Christmas, making the timeframe for festive shopping feel even more condensed.
While it may sound festive, the reality on the ground remains complex for many consumers. For example, people are still feeling the pinch of economic pressures, not least due to the sluggish job market and inflation continuing to take bites out of everyday budgets. NRF chief economist Jack Kleinhenz offers some cautious optimism, noting, "Household finances are in good shape and an impetus for strong spending heading toward the holiday season, though households will spend more cautiously."
This cautious optimism is precisely what retailers themselves need to tune their strategies toward—reaching those consumers who may be more wary about how much they spend. Dana Telsey, CEO of Telsey Advisory Group, emphasized the importance of retailers actively finding ways to promote their products to this ``more cautious`` consumer segment.
Shoppers are expected to be strategic. Earlier projections suggest e-commerce incentives, such as discounts and increasingly popular buy now, pay later options, will help drive online spending to new milestones as well. Adobe Analytics has previously indicated these buy now, pay later services might cultivate about $18.5 billion of online business this holiday season, reflecting an 11.4% increase year on year.
Now, let’s zoom out. On the more significant scale of annual growth, the NRF’s report highlights how holiday sales have already been trending upward preceding this year, with the record of $886 billion spent during the previous holiday stretch back in 2019 sparking changes we’ve seen since. Nonetheless, the interplay with natural events like hurricanes earlier this year adds layers of complication to the bigger financial picture.
At the end of the day, it’s clear: this holiday season promises to be one for the record books amid conditions requiring careful maneuvering on the part of both consumers and retailers. With strategies focused on discounting and appealing to cautious spending habits, the hope is for retailers to keep the merry spirit alive, even if the jingle of actual dollars is more muted than we've seen previously.
