PYMNTS-MonitorEdge-May-2024

Holiday eCommerce Sales Projected to Rise Despite Inflation

A new report suggests Americans will slow their holiday spending this year compared to 2023.

The annual holiday retail forecast from consulting firm Deloitte, released Thursday (Sept. 12), projects that holiday retail sales for 2024 will increase between 2.3% and 3.3%, to $1.58 trillion to $1.59 trillion between November and January.

Last year, holiday sales increased by 4.3% during the same time frame, Deloitte noted in a news release.

“Although the pace of increase in holiday sales will be slower than last year, we expect that healthy growth in disposable personal income, combined with a steady labor market, will support a solid holiday sales season,” said Akrur Barua, economist, Deloitte Insights.

“Meanwhile, inflation is both a headwind and tailwind to holiday sales. While declining inflation aids consumers’ purchasing power, it also is expected to negatively impact the nominal rise in the dollar value of sales.”

Barua added that increasing credit card debt and the possibility that many consumers have burned through their pandemic-era savings will likely impact sales growth.

One of the main drivers of growth, the report said, will be eCommerce, up 7% to 9% for the season, with sales between $289 billion and $294 billion this season.

“Our forecast indicates that e-commerce sales will remain strong as consumers continue to take advantage of online deals to maximize their spending,” said Michael Jeschke, principal, Deloitte Consulting, and the firm’s retail and consumer products lead.

“While this holiday season reflects a return to trend levels of growth, retailers who focus on building loyalty and trust with consumers could be well positioned for success.”

The report comes days after reports showing that inflation had slowed to a three-year low, even as data from the Fed shows consumers have loaded up on revolving debt on credit cards, with debt 25% above pre-pandemic levels.

While the Fed data showed median household spending growth expectations creeping up, if things like shelter and dining out remain pricey, PYMNTS wrote, “the read-across is that there’s less money to spend on other things such as apparel or electronics headed into the fall months and the holiday shopping season.”

And as noted here last week, there are signs that cash-strapped consumers may spend this fall chasing deals.

“Given the significant headwinds they faced with inflation over the last few years, consumers continue to focus on value as they work hard to manage their household budgets,” Target Chair and CEO Brian Cornell told analysts on the company’s latest earnings call last month. “And while they continue to turn out and shop around holidays and other seasonal moments, many are delaying purchases until the moment of need.”

PYMNTS-MonitorEdge-May-2024