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Customer Growth Partners: Holiday sales growth signal 'return to normalcy'

Inflation weighed heavily on spending in the 2022 holiday season.

Holiday sales growth slowed down in 2022 — and that may not be such a bad thing, according to one retail expert.

Holiday sales grew 5.2% year-over-year based on Census Bureau data for the December and November period. The increase is fractionally above the 10-year compound annual growth rate of 5.0% — marking a return to normalcy after the unprecedented decline and then the steep rebound in the post-COVID period, said Craig Johnson, president of retail consultancy Customer Growth Partners. (By contrast, 2021 holiday sales grew 13%.)

“After stratospheric growth for more than a year consumer spending is easing to a slower but perhaps healthier mid-single-digit range,” Johnson said. “The retail recovery is now approaching its third year, and with holiday spending up barely 5%, we’re seeing a healthy normalization in retail spending, as consumers rebalance spending on services versus goods.”

At the same time, retailers have largely — but not fully — rebalanced their operations to reflect the new environment, including trimming bloated inventories, improving supply chain flexibility and optimizing digital and in-store demand, Johnson added.

With the consumer economy accounting for more than 68% of overall GDP, and retail the largest segment of consumer spending, the slowing retail recovery may not bolster the wider economic outlook as in past years, according to CGP’s 2023 Annual Forecast.

“The past two years have provided a unique window into the resilience of the American consumer, as she rebalances her spending towards more considered and fewer unplanned purchases,” Johnson said. “Retail growth is slowing as we lap last year’s supersonic pace, but we still saw record holiday spending of over $900 billion. If the worst of the inflationary fires ease in the New Year, and job growth continues, retail are likely to enjoy a return to sustainable growth in the sound 5% range for 2023.”


The dramatic deceleration in retail growth is due to rampant inflation across most sectors, and particularly in food, energy and household essentials costs — all non-discretionary goods that crowded out spending on discretionary gifts this year, especially self-gifting,  according to Johnson.

“The season was particularly challenging for lower-income household that were hard-pressed to weather the inflation winds and most likely to trade down to discount venues and to ‘house’ brands from national brands,” he said.

Holiday Recap

The CGP forecast includes the following category insights from the 2022 holiday sales period.

  • Digital and direct-to-consumer sales rose 9.5%, reflecting solid but not spectacular retail growth.
  • Food & beverage store sales rose 7.8%, due largely to rising inflation.
  • General merchandise sales rose 3.8%, with some lagging results from mass merchants.
  • Sporting goods, toys and books sales were up 3.5%, with improving sell-through in sporting goods.
  • Health and personal care store sales rose up 2.8%.
  • Consumer electronics and appliances remained the most challenged category, with sales down 5.6%.
  • Home furnishings sales fell 1.0% in a sluggish year.

Founded in 2001, CGP has conducted proprietary and public forecasts of annual, Back to School and holiday retail sales ever since. CGP’s 16-member field team conducts primary research weekly in more than 100 major shopping venues nationwide.

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