Holiday spending is typically make-or-break time for merchants—that's nothing new. But what was a bit surprising is the optimism we've seen in industry forecasts, which seems to run counter to the general apprehension most contacts in the retail sector have shared with regard to their overall outlook.
The traditional winter holidays are expected to bring healthy sales results. The National Retail Federation (NRF) forecasts that holiday sales this year will increase 4.1 percent to $586.1 billion, a bit below 2011's actual holiday sales increase of 5.6 percent but above the 10-year average holiday sales increase of 3.5 percent. The NRF tallies total retail industry sales from November and December—61 days total—to determine holiday sales. Holidays during this period include Thanksgiving, Christmas, Hanukkah, and Kwanzaa.
NRF Chief Economist Jack Kleinhenz said that
[w]hile moderate compared to what we experienced the last two holiday seasons, the forecast is a very pragmatic look at what to expect this year given the current rate of economic growth. There's still some general anxiety amongst consumers when it comes to how the state of the economy is impacting their spending plans, but retailers can expect to see excitement around their promotions and plenty of bargain hunters both online and in stores in the coming months.
The Internet will continue to play a significant role in holiday sales as well, according to the NRF. Its survey showed that more than half (51.8 percent) will shop online for gifts and other items this holiday season, up from 46.7 percent last year. Shop.org, NRF's digital division, expects online holiday sales will grow 12 percent over last season.
The spending boost is expected to begin before the traditional holiday season, according to the NRF. A record 170 million people plan to celebrate Halloween this year, according to the 2012 Halloween consumer spending survey conducted by BIGinsight. On average, consumers are expected to spend nearly $80 on decorations, costumes, and candy, up from just over $72 last year.
As the long holiday season progresses, we'll be checking in between now and the end of the year to determine if our retail contacts in the region are indeed experiencing a positive holiday season. It will serve as a useful barometer to the state of the consumer heading into 2013.
By Mike Chriszt, a vice president in the Atlanta Fed's research department and
Chris Viets, a REIN analyst in the Atlanta Fed's Jacksonville Branch
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