U.S. retail sales for the holiday season will rise only slightly amid “unparalleled uncertainty” due to the coronavirus pandemic, according to Deloitte.
The consulting firm predicted retail sales will increase between 1% and 1.5% for the November-January timeframe, resulting in sales of between $1.147 trillion and $1.152 trillion.
Retail sales rose 4.1% in the last holiday season. E-commerce is expected to offset slower brick-and-mortar store traffic this year with a sales increase of between 25% and 35%, compared with last year’s 14.7% spike.
“The lower projected holiday growth this season is not surprising given the state of the economy,” Daniel Bachman, Deloitte’s U.S. economic forecaster, said in a news release, noting that high unemployment and economic anxiety will weigh on retail sales this holiday season.
But he added that “reduced spending on pandemic-sensitive services such as restaurants and travel may help bolster retail holiday sales somewhat.”
Deloitte said the holiday season “will be marked by unparalleled uncertainty” and it sees holiday sales playing out in one of two possible scenarios.
Under one scenario, sales will grow 0% to 1% as consumers — especially lower-wage earners — “continue to experience mounting anxieties, related to both their finances and health,” reinforcing the current trend of very high savings.
Alternatively, there could be sales growth of 2.5% to 3.5% if wealthier consumers become more confident due to shrinking unemployment, additional government stimulus, and an effective COVID-19 vaccine.
The formal forecast of 1% to 1.5% growth represents a melding of the two scenarios.
Regardless of the scenario, “the consumer’s focus on health, financial concerns and safety will result in a shift in the way they spend their holiday budget,” said Rod Sides, vice chairman and U.S. retail and distribution sector leader of Deloitte. “For retailers, this holiday season will continue to push the boundaries on the importance of online, convenience, the role of the store, and the criticalness of safe and speedy fulfillment.”
The expected jump in holiday online sales reflects the shift in habits as consumers under stay-at-home restrictions have filled virtual shopping carts rather than venture into physical stores.