With plentiful jobs, (slightly) higher pay and consumer willingness to spend, analysts at Deloitte project that the 2018 holiday shopping season will see a 5.0% to 5.6% year-over-year increase in retail sales. Total sales are projected to rise to more than $1.1 trillion.
E-commerce sales are forecast to rise to between $124 billion and $134 billion, a 17% to 22% year-over-year jump. Online sales rose 16.6% year over year in 2017.
Deloitte economic forecaster Daniel Bachman said:
The anticipated growth in holiday sales is likely because of solid disposable personal income growth, which we expect will be in the 5 to 5.4 percent range. That is above last year’s 4.7 percent. A strong labor market should also aid retail spending, along with elevated consumer confidence and a stable personal savings rate of around 7 percent.
The firm noted as well that there are some risks attached to forecasting spending levels. The Federal Reserve’s interest rate increases, currently not expected to have any impact until next year, may be felt before the end of this year. A stock market correction could knock a hole in consumer confidence, currently at near record-high levels, or reduce household wealth.
Deloitte Vice Chair Rod Sides commented:
We’ve seen retailers continue to advance their approaches to shipping, delivery, in-store experiences and tech-enabled commerce. That can include things like showrooms, interactive displays that replace sorting through racks with simple, easy selections or web-based visualization that lets people get a feel for the style, fit, and appearance from apparel to home decor. Voice-enabled shopping and shortened delivery times may also accelerate the competition around fast and easy purchasing options. The leading retailers this holiday season could be the ones who are able to strike the right balance between innovation, experience, and value that best engages the consumer and stands out in a busy season.
The Deloitte forecast is slightly higher than an earlier forecast for a holiday retail sales increase of 4% from Coresight Research. That firm also projected a 16% increase in e-commerce sales.
Internet Retailer Research, which tracks hundreds of metrics on roughly 6,000 online retail companies around the world, forecasts e-commerce sales will account for 16.7% of all U.S. holiday season sales, or nearly $120 billion.
Fareeha Ali, director of research strategy at Internet Retailer, observed:
The growth in U.S. e-commerce has been consistent since 2010, averaging 15% each year and showing no signs of slowing down. Add to that high consumer confidence, a healthy economy and strong 2018 online growth from retail giants like Amazon and Walmart, and we’re on track for a big holiday shopping season.