The holiday season could surpass forecast spending figures and equate to a record year, despite inflation, supply chain issues and COVID-19 challenges like the omicron variant.
According to National Retail Federation (NRF) Chief Economist Jack Kleinhenz, the 2021 holiday season is on track to exceed the NRF’s forecast for record spending, in spite of the many challenges.
Inflation and Omicron Not Affecting Holiday Shoppers
The positive findings highlighted in the report will provide relief to many small businesses which may have been apprehensive about the 2021 festive season in light of the current challenges.
The data points to high consumer spending, making it more imperative then ever that retailers and small businesses reach out to consumers and keep up with high demand.
NRF Monthly Economic Review
Kleinhenz comments followed the release of the December issue of the NRF’s Monthly Economic Review. The review points to data that shows consumer growth and therefore a promising outlook for businesses in the holiday season.
For example, data released from the Bureau of Economic Analysis showed that although US economic growth slowed to 2.1% in the third quarter of 2021, down from 6.7% in the second quarter, real domestic gross domestic product was still up 4.5% higher compared to what it was in the third quarter of 2020.
According to the NRF report, third-quarter growth was led by personal consumption and increased inventories as retailers and businesses worked to keep up with demand. The data shows that business investment was also up, particularly in intellectual property, and state and local government purchases. That said, business investment in equipment and commercial construction slowed.
Data is Encouraging and Insightful
Referring to the data as encouraging and insightful, Kleinhenz commented:
“Now that we’re in December, the holiday shopping season is nearing the finish line. The question is how have factors ranging from economic indicators to the twists of the COVID-19 pandemic affected the season so far, and what role will they play in the weeks that remain? There’s no crystal ball to provide a definitive answer, but the latest data is encouraging and provides useful insights. In fact, the season could turn out even better than we expected.”
“Consumers and retailers have both revised their playbooks and broken with previous traditions. With the momentum we’ve seen so far likely to continue, it seems probable that we will exceed our initial projection,” Kleinhenz added.
Holiday Season Off to a Good Start
The report shows how the holiday season has got off to a good start. As seen with the October spending results, it seems consumers began their holiday shopping earlier than ever this year. Instead of the 8.5% to 10.5% growth over 2020 the NRF had expected in October, the Federation believes holiday retail sales could grow as much as 11.5%.
The NRF notes that in terms of the new COVID-19 omicron variant, it is too early to have any clear answers on how it will impact the economy and retail industry.
However, early figures suggest that, compared to where we were a year ago, the outlook is much more positive. As long as retailers and businesses continue to follow the procedures and protocols to protect their workers, customers and the communities they serve, 2021 could prove to be a successful holiday season for many.