But They Will Be Looking for “Deals”
The National Retail Federation (NFR) is predicting 3%-to-4% growth in consumer spending during 2023’s holiday shopping season. NFR forecasts that consumer will spend $957 billion which would be as much as $30 billion more than last year, but economic factors also come into play.
Predictions are for a good holiday shopping season. Photo EnvatoElements.com
While that sounds good and in line with what was seen before the pandemic, that increase is far less than what was seen during 2021 and 2022, which saw spikes of 5.4% and 14.1%, respectively, which followed an 8.2% growth in 2020. So this year will be more “normal,” rather than the “boom” years druing and immediately following the pandemic.
Consumers Are Resilient
“In spite of the uncertainty in the economy and the challenges that households are facing, we’ve seen strength and resilience across the consumer sector,” NRF President and CEO Matthew Shay said in a recent press conference announcing the results of NFR’s holiday forecast.
Last year’s prediction had to be revised downward. NFR had forecast 6%-to-8% growth, but the reality was 5.4%.
Looking for Deals
CNBC noted that, even though inflation is cooling, many gift-giving items and food cost more. As of September, inflation is up 3.7% compared with a year ago, according to the Bureau of Labor Statistic’s consumer price index. That is about half the 7% inflation rate of 2021, which was the highest in 40 years. CNBC also expects consumers to be cost-conscious and looking for bargain because of economic concerns.
One factor fueling the preference for bargains is greatly increased credit card balances. According to CNN, during the third quarter, credit card balances hit a fresh high of $1.08 trillion. This represents a rise of $48 billion from the prior quarter and a record increase of $154 billion from the year before, according to the Federal Reserve Bank of New York’s latest Quarterly Report on Household Debt and Credit released Tuesday, Nov. 7. Higher interest rates, which the Fed is using to tamp down inflation, make this problem worse for consumers.
Mall Optimism
ICSC, the trade group representing malls, shopping centers, and other marketplaces, predicted last month that holiday retail sales will be up 3.8%, with food and beverage sales up 7.6%.
Gift cards were mentioned by those surveyed as the most popular gift, with 55% saying they would like to receive them, followed by clothing and accessories (49%), books, video games and other media (28%), and personal care and beauty items (25%).
NRF’s latest consumer survey was conducted by Prosper Insights & Analytics.
