U.S. Holiday Sales Expected to Grow at Slowest Pace in Six Years

(Reuters) – U.S. holiday sales are projected to grow at their slowest rate in six years, according to data from Deloitte released on Thursday. Persistent inflation and dwindling savings have resulted in consumers becoming more frugal during this crucial shopping period.

Holiday retail sales are anticipated to increase between 2.3% and 3.3% between November 2024 and January 2025, amounting to a total of up to $1.59 trillion. This follows a 4.3% growth to $1.54 trillion last year.

Sales had previously increased by 3.1% in 2018.

Why It’s Important

Holiday sales typically constitute over half of annual revenue for U.S. retailers. This year features a shorter shopping season, with just 27 days between Thanksgiving and Christmas, prompting retailers to initiate promotions and discounts earlier.

Context

Consumers across all income levels are facing the effects of reduced personal savings, which have dropped to about 3.4% in recent months from an average of 3.8% in June. As a result, customers are expected to start hunting for bargains early, seeking discounts across various categories, including groceries and home goods.

By The Numbers

• Deloitte predicts ” e-commerce sales” will rise in the range of 7%-9% for the upcoming holiday season, reaching up to $294 billion, down from a 10.1% increase to $270 billion last year.
• In-store sales are expected to grow by 1.3% to 2.1%, totaling up to $1.3 trillion, compared to a 3.1% increase to $1.27 trillion last year.

Key Quotes

“Rising credit card debt and the potential exhaustion of pandemic savings may hinder sales growth this season compared to previous years,” stated Michael Jeschke, leader of Deloitte Consulting’s Retail & Consumer Products.

“Our forecast indicates that e-commerce sales will remain robust as consumers continue to leverage online deals to maximize their expenditures.”