U.S. Holiday Sales Forecast

(Reuters) – U.S. holiday sales are expected to grow at their slowest pace in six years, according to data from Deloitte on Thursday, due to persistent inflation and dwindling savings that have led shoppers to become more frugal during this crucial shopping period.

Sales Growth Predictions

Holiday retail sales are projected to rise between 2.3% and 3.3% from November 2024 to January 2025, totaling up to $1.59 trillion. This compares to a 4.3% increase to $1.54 trillion last year. For context, sales grew 3.1% in 2018.

Importance of Holiday Sales

The holiday season accounts for more than half of U.S. retailers' annual revenue. This year, a shorter shopping season with only 27 days between Thanksgiving and Christmas has prompted retailers to offer higher promotional discounts earlier.

Economic Context

Consumers of all income levels are feeling the effects of lower personal savings, which have dipped to 3.4% recently, compared to an average of 3.8% in June. As a result, shoppers are anticipated to start hunting for bargains early, seeking additional discounts in categories like groceries and home goods.

E-commerce vs. In-store Sales

Deloitte anticipates e-commerce sales to increase between 7% and 9%, reaching up to $294 billion this holiday season, a decline from last year's 10.1% increase to $270 billion. In-store sales are projected to rise by 1.3% to 2.1%, amounting to up to $1.3 trillion, compared to a 3.1% rise to $1.27 trillion last year.

Key Insights

"Rising credit card debt and the possibility that many consumers have exhausted their pandemic-era savings will likely weigh on sales growth this season compared to the previous one," stated Michael Jeschke, leader of Deloitte Consulting's Retail & Consumer Products. "Our forecast indicates that e-commerce sales will remain strong as consumers continue to take advantage of online deals to maximize their spending."