Consumers Could Spend $960 Billion on the Holidays

The forecast is 8% higher than 2021 sales, while holiday online shopping could grow 12% year over year.

November 04, 2022

WASHINGTON—Holiday sales could reach up to $960.4 billion, according to the National Retail Federation’s (NRF) holiday forecast for 2022, and consumers plan to spend $832.84 on average on gifts and holiday items such as decorations and food.

The association predicts that holiday retail sales during November and December will grow between 6% and 8% over 2021 to between $942.6 billion and $960.4 billion. Holiday sales were record-breaking last year, up 13.5% over 2020 and totaled $889.3 billion. Holiday retail sales have averaged a 4.9% increase over the past 10 years, with pandemic spending in recent years accounting for considerable gains, according to NRF.

“While consumers are feeling the pressure of inflation and higher prices, and while there is continued stratification with consumer spending and behavior among households at different income levels, consumers remain resilient and continue to engage in commerce,” NRF President and CEO Matthew Shay said. “In the face of these challenges, many households will supplement spending with savings and credit to provide a cushion and result in a positive holiday season.”

NRF expects online and other non-store sales to increase between 10% and 12% to between $262.8 billion and $267.6 billion, up from $238.9 billion last year.

In 2021, digital channels saw extraordinary growth as consumers turned to online shopping to meet their holiday needs during the pandemic, says NRF. While e-commerce will remain important, households are also expected to shift back to in-store shopping and a more traditional holiday shopping experience, NRF predicts.

This projection mirrors research by the NPD Group that found 80% of shoppers plan to shop online this year, down from 85% in 2021. Online shopping plans are still up from 2019 and earlier—76% of shoppers had planned to shop online in 2019.

“This holiday season cycle is anything but typical,” NRF Chief Economist Jack Kleinhenz said. “NRF’s holiday forecast takes a number of factors into consideration, but the overall outlook is generally positive as consumer fundamentals continue to support economic activity. Despite record levels of inflation, rising interest rates and low levels of confidence, consumers have been steadfast in their spending and remain in the driver’s seat.”

According to Kleinhenz, the holiday shopping season began earlier this year amid shopper concerns over inflation and product availability, and retailers have responded with early deals. Target began its Black Friday sales in early October, while Walmart also offered sales early last month and extended its return holiday policy to run through January 31, 2023. The retailer is offering curbside returns and return pickup from home for Walmart+ members. Amazon held its second Prime Day-like event last month and dubbed it a holiday shopping event.

NRF consumer data shows that consumers have begun holiday shopping early over the past decade to spread out their budgets and avoid the stress of holiday shopping. Given concerns around inflation, 46% of holiday shoppers said they planned to browse or buy before November.

This year, retailers have had excess inventory, while shoppers have shifted their habits. The past two years have brought record online spending, and shoppers were willing to buy all sorts of items, which took its toll on the supply chain. In anticipation of continued spending and to get ahead of supply chain issues, companies stocked up. But then decades-high inflation hit Americans. High gasoline and food prices forced consumers to be more selective in their spending, leaving companies with more inventory than they could sell.

NRF expects retailers will hire between 450,000 and 600,000 seasonal workers. That compares with 669,800 seasonal hires in 2021. Some of this hiring may have been pulled into October as many retailers are eager to supplement their workforces to meet increased consumer demand. Amazon is hiring 150,000 employees throughout the U.S. in full-time, seasonal and part-time roles, and Walmart is bringing on 40,000 additional employees in a variety of seasonal and full-time roles in preparation for the holiday shopping season. Target is hiring 100,000 seasonal workers.

NRF’s holiday forecast is in line with the organization’s full-year forecast for retail sales, which predicted retail sales will grow between 6% and 8% to more than $4.86 trillion in 2022.