The National Retail Federation (NRF) predicts that holiday spending will reach record levels during November and December, with spending between $957.3 billion and $966.6 billion, a 3%-4% increase from 2022.
Despite having a slower growth rate than the past three years, the NRF said that this year’s holiday spending is consistent with the average annual holiday increase of 3.6% from 2010 to 2019.
“It is not surprising to see holiday sales growth returning to pre-pandemic levels,” NRF President and CEO Matthew Shay said. “Overall household finances remain in good shape and will continue to support the consumer’s ability to spend.”
“Consumers remain in the driver’s seat and are resilient despite headwinds of inflation, higher gas prices, stringent credit conditions and elevated interest rates,” NRF Chief Economist Jack Kleinhenz said. “We expect spending to continue through the end of the year on a range of items and experiences, but at a slower pace. Solid job and wage growth will be contributing factors this holiday season, and consumers will be looking for deals and discounts to stretch their dollars.”
Target is taking a cautious outlook towards holiday spending this year. In an interview with CNBC, Target CEO Brian Cornell said shoppers are stressed about their budgets and pulling back on spending, including on groceries.
He emphasized that the company has seen seven consecutive quarters of declining sales in discretionary items, like apparel and toys. Cornell also stated that units sold in food and beverage categories have been declining.
“We’ve taken a much more conservative approach in planning inventory this year,” he said. “But we’re going to lean into those big seasonal moments and play to win when we know the consumer is looking for something that’s new, looking for affordability, looking for that special item for the holiday season.”
According to CNBC, Cornell said “the company has faced a turnabout from previous holiday seasons. During the height of the Covid crisis, it didn’t have enough merchandise because of pandemic-related supply chain bottlenecks. Then, a year ago, it coped with too much of the wrong inventory.”