Supply Issues, Rising Prices Won't Deter Holiday Shoppers From Spending Big: Trade Group

Though snares in the global supply chain could raise prices for many items on the market, the nation's largest retail trade group predicts that growth in holiday sales this year will surpass the record-breaking numbers recorded in 2020, the Associated Press reported.

The National Retail Federation (NRF) said Wednesday that it believes sales in November and December will grow between 8.5 percent and 10.5 percent, equating to between $843.4 billion and $859 billion, respectively.

In 2020, holiday sales increased 8.2 percent compared to the previous year, fueled mostly by online shoppers stuck in their homes amid the pandemic. The gains in 2020 and expected gains this year are a steep rise from the average increase of 4.4 percent over the past five years, according to the NRF.

The group also predicts considerable growth in online shopping and other non-store sales alone, with increases between 11 percent and 15 percent for a total of $218.3 billion to $226.2 billion, AP reported.

"There is considerable momentum heading into the holiday shopping season," NRF President and CEO Matthew Shay said. "Consumers are in a very favorable position going into the last few months of the year as income is rising and household balance sheets have never been stronger."

For more reporting from the Associated Press, see below.

Holiday Shopping Expected to Soar
The National Retail Federation expects that holiday sales gain could shatter last year’s record-breaking season, even as a snarled global supply chain slows the flow of goods and results in higher prices for broad range of items. Above, a woman carries shopping bags in New York on December 10, 2020. Mark Lennihan/AP Photo

The forecast considers a variety of indicators including employment, wages, consumer confidence, disposable income, consumer credit, previous retail sales and weather.

Shay also noted during a call with the media on Wednesday that the lifting of U.S. restrictions on international visitors from more than 30 countries early next next month should also give a jolt to retailers this holiday season.

NRF's rosy forecast is similar to other predictions, which call for holiday sales to increase by at least 7 percent, according to Deloitte, MastercardSpending Pulse and KPMG.

Still, NRF executives acknowledged on the call that there are plenty of headwinds facing consumers who are dealing with the ripple effects of a clogged supply chain that has meant higher prices, less generous discounts and shortages of items.

For example, online prices are up 3 percent heading into the holidays; in contrast, that number, on average, has been down 5 percent in past years, according to the Adobe Digital Economy Index, which tracks more than one trillion visits to U.S. retail sites. Adobe predicts that discounts will be in the 5 percent to 25 percent range across categories this season, compared to a historical average of 10 percent to 30 percent.

Just like last year, shoppers are shopping early for the holiday season for fear of not getting what they want. But Shay said that retailers are doing a good job in making sure inventory is on the shelves though there will be some gaps in some categories.

Still, he has seen shoppers learn to adjust by switching to other brands and items if they can't find their top choice. That happened in the early days of the pandemic when customers were looking for alternative consumer packaged brands when they couldn't find their top choice.

"Consumer will not be deterred," Shay said. "They will be out shopping for the holidays, and they won't go home empty-handed."

Holiday Shopping Sales Increases
Though snares in the global supply chain could raise prices for many items on the market, the nation’s largest retail trade group predicts that growth in holiday sales this year will surpass the record-breaking numbers recorded in 2020. Above, children get excited by the artificial snow spewing from the "World's Tallest Live-cut Christmas Tree," standing 115 feet and decorated with some 18,000 multi-colored LED lights, at the Citadel Outlets shopping plaza in Los Angeles on December 17, 2019. Frederic J. Brown/AFP via Getty Images