Bain: U.S. holiday sales to grow 4%; to outperform, retailers should…
Retailers are advised to "go big" with sales events this holiday season, during which they can expect “healthy” but below-average sales growth as consumers remain cautious amid financial pressure.
That’s according to Bain & Company’s annual U.S. retail holiday forecast, which expects a 4% year-over-year increase in retail sales in November and December, reaching more than $975 billion. That compares with a 10-year average of 5.2%, underscoring consumer caution, though rising wages, stock market strength and potential interest rate cuts could help boost holiday sales, according to the report.
Bain's survey shows, when compared to last year, consumers expect to do more in-store shopping. The global consultancy estimates in-store sales will grow 2.75% year over year contributing 2% of overall growth, with the strongest gains in clothing and accessories, general merchandise (excluding department stores), and health and personal care, which are poised to grow 5% or more. Sales in sectors that include electronics and appliances, building and garden, and furniture stores are expected to decline.
In other findings, growth from non-store sales, which includes e-commerce and mail orders, have slowed to 7% — a decrease from the 9% to 10% growth seen by non-stores during the same period in the last two years. However, non-store sales are still expected to account for half (50%) of all sales growth overall, according to the report.
Headwinds
Bain's proprietary Consumer Health Index shows that U.S. households across income groups reported a worsening fiscal outlook in August. Among upper-income households — those who account for 54% of consumer spending — both outlook and intent to spend remain elevated compared with last year, though recent data shows they are slowing.
Financial strain is evident. Severe credit delinquencies (90 or more days overdue) have risen about 3% year over year to their highest level since 2011, particularly among borrowers under age 30. Savings rates remain low, and labor force participation fell 0.4 percentage points in August compared with a year ago.
Despite these pressures, several factors could help support nominal sales growth. Average hourly wages grew 3.7% year over year in August, outpacing inflation growth and consumer price index (CPI) which grew just 3.1%, giving many consumers more confidence and spending power. The S&P 500 is up 21% compared with 2024, likely boosting wealth perceptions among higher-income households. The potential for interest rate cuts could also bolster consumer sentiment heading into the holidays.
Outperform
Bain suggested four ways retailers can outperform this holiday season.
- Go big on sales events. Ten percent more consumers plan to shop on Black Friday and Cyber Monday compared to last year.
- Lead with sharp key value items pricing and emphasize value. With 55% of shoppers saying high prices will affect their holiday budgets, it's important that retailers stress value over price.
- Keep experiences warmly human, even with AI. As more consumers plan to shop in store, retailers should enhance frontline staff with technology while keeping service personal.
- Use timely, personalized ads. With 30% more consumers open to sponsored ads this year, well-targeted campaigns can influence shopping decisions.
"This holiday season will be a mixed one for U.S. retailers," said Aaron Cheris, partner in Bain's retail practice. "Consumers are cautious and facing financial pressure, but they are also feeling the lift from higher wages and a strong stock market. Leading retailers will strike the right balance — leaning into value, creating warm human experiences while implementing new technologies, and capitalizing on big events like Black Friday to capture share from competitors."
