NRF: Retail sales to grow between 6% and 8% in 2022

Retail sales are expected to grow in 2022, but at a much slower pace than last year.

According to the National Retail Federation’s annual forecast, retail sales will grow between 6% and 8% in 2022, to between $4.86 trillion and $4.95, with some of the gains coming from higher prices due to inflation. (The numbers exclude automobile dealers, gasoline stations and restaurants.)

The NRF’s outlook for 2022, which it delivered at its annual State of Retail & the Consumer virtual event, is much slower than the 14% annual growth rate in 2021, which was the highest in more than 20 years. But it is still higher than the 10-year, pre-pandemic growth rate of 3.7%.

Non-store and online sales year-over-year, which are included in the total figure, are expected to grow between 11% and 13% tthis year, to between $1.17 trillion and $1.19 trillion.

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NRF anticipates strong job and wage growth and declining unemployment. The organization projects full-year GDP growth will be slower this year, around 3.5%, amid the surge of inflation and tightening of monetary policy and less fiscal stimulus.

“Most households have never experienced anything like this level of inflation, and it is expected to remain elevated well into 2023,” said NRF chief economist Jack Kleinhenz. “In addition to inflation, the forces impacting the economy include COVID-19 impacts, international tensions and policy variability.

In remarks at the NRF event, Kleinhenz said he doesn’t expect inflation to let up until 2023.

[Read More: NRF chief economist talks about inflation]

Retailers are also up against hard comparisons from last year when sales were boosted by government stimulus checks.

Kleinhenz added that although a “roller coaster ride” of incoming data is expected in the next few months, consumer fundamentals remain in place. Household finances are healthy and strong job and wage growth should support solid growth for consumer spending for 2022. 

Retail sales are expected to remain strong as the economy opens further in the coming months, the NRF said. (According to Mastercard SpendingPulse, overall retail sales [excluding auto] in February increased 8.7% year-over-year.) But there is considerable uncertainty this year that the group said it will continue to monitor closely.

"While retail revenue forecasts remain strong, we must stay vigilant," said Dave Bruno, director of retail market insights at Aptos. "There is still so much uncertainty and risk ahead. Despite somewhat solid fundamentals, consumers have so many things to contend with right now - war, inflation, fuel prices, the winding down of COVID benefits, to name just a few – which will put a strain on consumer confidence and, I suspect, future numbers."

 Bruno said he expects the spring holidays will likely mask some of these underlying concerns through March and much of April.

"Nonetheless, retailers should prepare for the uncertain months ahead by focusing on the one thing they can control: the customer experience," he added. "Retailers who empower shoppers with convenience, flexibility, transparency and timely communications throughout every journey will earn the confidence of their customers and thereby encourage more purchases, more often."