CGP: Holiday sales to rise by 4%, led by online; consumers focused on ‘deep value’
An annual holiday forecast predicts mediocre holiday retail growth.
Buffeted by both economic — and actual — crosswinds, American consumers have begun trimming their shopping sails just as the annual holiday season is about to begin, according to research and consulting firm Customer Growth Partners’ 23rd Annual Forecast Holiday. CGP predicts that holiday sales will rise a sluggish 4% year-over-year to $963 billion, up from $926 billion in 2023.
The growth marks the slowest-growing holiday season since pre-Covid 2019’s increase of 3.9%. The results indicate that consumer spending has fully normalized from its frenzied pandemic period pace. The report noted that after the Covid-era holiday retail growth peaked at 12.1% in 2021, retail spending has settled in the low-to-middle 4% growth range, as shoppers pivoted to a slower spending pace than the 10-year 5.2% average growth rate.
“The economy is flashing warning lights due to changing consumer behaviors,” said CGP president Craig Johnson. “First, shoppers are buying closer to need, as they stretch out their family budgets in the face of inflation and rising interest rates. Also, households are shopping strategically, trading down if necessary while focusing on deep value retailers.”
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Although these changes in shopping patterns are most evident in moderate-income households, CGP said its research field team has even seen wealthier households adopting these behaviors.
“Retail growth is easing as we enter the all-important holiday shopping season,” Johnson said. “But if real wages begin to rise again — and inflation is held in check — we may well see retail spending return to a robust pace of 5% to 6% in 2025.”
Other highlights of CGP’s 23rd holiday forecast are below.
- Continuing to show strong momentum, online /direct-to-consumer will pace the retail sector, up 7.2% year-over-year.
- The pet/office/vintage miscellaneous sector will jump a solid 6.0% from holiday 2023.
- Health and personal care will slow its growth rate, but will still rise by a solid 4.5% year-over-year.
- The consumer electronics and appliance sector will accelerate modestly to 3.2% growth.
- Apparel stores mostly moved sideways this year, and will post an anemic 2.3% increase this holiday, easing modestly from 2.9% year-over-year.
- Superstores and food & beverages will average will each rise 2.3% from last year.
- The home improvement sector rebounded sharply from holiday 2023’s dreadful 4.2% decline, reaching 2.7% growth this holiday, bolstered by hurricane-related spending.
Weaker categories include:
- Sports/toy/hobby: Down 3.0%.
- Home furnishings: Up a dismal 1.3%, but still far better than 2023’s 4.6%, though this change due to Hurricanes Helene and Milton.
“The hurricanes will trigger both headwinds and tailwinds in the affected areas,” explained Johnson. “Headwind from the many store closures and loss of homes and incomes; positive from the spending on cleanup and restoration. The clean-up will take place largely before holiday peaks, and the rebuild will extend well into 2025-2026 and beyond. The holiday season impact is estimated at about an additional $2 billion, including at HIP retailers.”
