Elevated consumer spending on services and continued growth in e-commerce is expected to make for a merry holiday season for retailers.
Total holiday retail sales are likely to increase between 7% and 9% in 2021, according to Deloitte's annual holiday retail forecast. E-commerce sales are projected to grow by 11% to 15%.
Deloitte's retail and distribution practice projects that overall holiday sales will total $1.28 to $1.3 trillion during the November to January timeframe. E-commerce sales alone are expected to reach between $210 billion and $218 billion. (E-commerce sales between November 2020 and January 2021 —seasonally adjusted and excluding gasoline stations, motor vehicles and parts dealers, and food services — grew 34.8% totaling $189 billion.)
“As vaccination rates rise and consumers are more comfortable being outside of the home, we are likely to see increased spending on services, including restaurants and travel, while spending on goods will continue to hold steady,” said Daniel Bachman, Deloitte’s U.S. economic forecaster. “A steady decline in the savings rate to pre-pandemic levels will support consumer spending and keep retail sales elevated this season."
Bachman noted that the projected 2021 holiday season sales increase reflects continued growth. Last year's holiday sales came in higher than expected, increasing by 5.8%. (Retail sales between November 2020 and January 2021 — seasonally adjusted and excluding automotive and gasoline —grew 5.8% and totaled $1.19 trillion according to the U.S. Census Bureau.)
The Deloitte forecast projects a strong growth rate amid already elevated retail sales and growth in disposable personal income that is likely to remain flat heading into the season. However, the Delta variant and ongoing uncertainty spurred by the pandemic may drive more spending on goods.
"While consumer concerns about health and safety have eased since the last holiday season, pandemic-influenced shopping behaviors continue to gain traction,” said Rod Sides, vice chairman, Deloitte LLP and U.S. retail and distribution sector leader. Retailers who remain resilient to shifting consumer behaviors and offer convenient options for online and in-store shopping, as well as order fulfillment, will be poised for growth this holiday season, and into the new year."
The Deloitte forecast comes on the heels of a report by Mastercard SpendingPulse, which forecast a 7.4% increase in holiday sales (Nov. 1- Dec. 24).