In a climate of robust employment and thriving wage growth, Deloitte’s latest forecast suggests a festive boost for holiday sales in 2023. Despite the specter of inflation, its impact on consumers appears to be receding, paving the way for an anticipated increase in holiday retail sales, driven by a flourishing job market and enduring wage growth, according to the commerce trends report.
Deloitte’s projections indicate a potential rise in holiday retail sales between 3.5% and 4.6%, albeit a slowdown from the 7.6% growth witnessed during the same November-to-January period in 2022. The accounting giant estimates total holiday sales to be in the region of $1.54 trillion to $1.56 trillion, with e-commerce contributing a significant chunk of between $278 billion to $284 billion, marking a year-over-year rise of 10.3% to 12.8%.
Deloitte Forecasts Brighter Holiday Sales Amid Lower Inflation
The present low unemployment figures and continuous wage growth have led Deloitte to forecast a rise in holiday retail sales for 2023. Despite the ongoing impact of inflation, the commerce trends suggest a positive outlook for the retail sector.
Strong Sales Growth Expected
Holiday retail sales are predicted to grow between 3.5% and 4.6% this year, a decrease compared to the 7.6% growth seen over the same November-to-January period in 2022. According to Deloitte’s forecast, total holiday sales are anticipated to range between $1.54 trillion and $1.56 trillion. E-commerce is expected to contribute significantly to these figures, with projected sales of $278 billion to $284 billion, marking a 10.3% to 12.8% increase year over year.
Impact of Inflation on Retail Sales
Despite the forecasted lower value of retail sales this year, Deloitte suggests this is primarily due to moderating inflation. Last year’s high sales values were largely due to inflation, which is expected to slow down this year. "Inflation, which accounted for much of the increase in the value of retail sales last year, should moderate," stated Daniel Bachman, Deloitte’s U.S. economic forecaster. He added, "This means the total value of retail sales will grow more slowly than last year.”
E-commerce and Inflation: A Correlation
The report also noted a possible correlation between inflation and the anticipated boost in online sales. "This season e-commerce sales should continue to be strong as consumers search for the best deals online to maximize their wallets," said Nick Handrinos, vice chairman and leader of Deloitte’s retail, wholesale and distribution, and consumer products practice.
Consumer Sentiment and the Economy
Interestingly, consumers seem optimistic about the slowing inflation. The Michigan Consumer Sentiment Index in July reached its highest levels since October 2021, powered by consumer enthusiasm for lower inflation and a robust job market. Consumer sentiment indices are critical for economists as they reflect the public’s readiness to spend, a key driver of the U.S. economy.
The projected growth in holiday retail sales, despite a slower rate compared to last year, indicates a resilient economy. The shift towards e-commerce suggests retailers must remain adaptable to meet changing consumer demands and behaviours. Additionally, the positive consumer sentiment towards moderating inflation and the strong job market could potentially stimulate economic growth.