U.S. retail sales are expected to grow 3.8% this holiday season, according to the country’s major shopping center body.
ICSC’s 2023 holiday shopping forecast also forecast a 7.6% increase on F&B spend, bringing the total expected spend for the season to $1.60 trillion as 235 million (90%) of consumers plan to shop this year.
ICSC’s survey found that eight-in-10 shoppers expect to spend about the same as or more than they did last year during the holiday season. This figure shows a slight uptick compared with the 73% of consumers who said the same in 2022.
In all, 42% of consumers attributed their expectation for increased spending to inflation and a higher cost of holiday items, while 54% plan to spend less for the same reason and 38% said they expect to spend more as holiday deals and promotions provide more value for their spending.
Of those who plan to spend less, 43% said it was due to a change in their personal budget, regardless of job status or income.
Online Or Offline?
About 204 million people (87%) are expected to head to brick-and-mortar stores this holiday season, while three-quarters of respondents said they plan to make a purchase online and have the items shipped to them. Expected spending is evenly split between online and in-person shopping, with 41% of total expenditure expected to happen at a physical store, 42% to be spent online, and 17% on click-and-collect.
Consumers anticipate consolidating their purchases across fewer retailers this holiday season, as they plan to purchase from an average of 2.4 different types of retailers, compared with 3.4 in 2022. Discount department stores remain the most popular stop for 63% of shoppers, with traditional department stores the second-most popular destination (34%), followed by electronics stores (22%).
During those shopping trips, most consumers plan to pay with a debit (63%) or credit (50%) card. Nearly half (48%) expect to pay with cash, while 14% will leverage buy now, pay later options.
Earlier Holiday Shopping
Gift cards remain the most popular category for purchases – an item that’s on the shopping list of 63% of respondents – followed by apparel and footwear (56%), and toys and games (49%). In all, 45% of consumers plan to purchase food, like pre-packaged baskets and alcohol, while electronics and experiential purchases were cited by 41% and 22% of respondents, respectively.
In addition, 79% of consumers plan to start shopping for the holidays earlier than they normally would. In fact, one-in-four already started their holiday shopping in August or earlier. Of the consumers who plan to shop earlier for the holidays, 51% do so for the early promotions.
“This year will continue the trend of consumers starting their holiday shopping earlier and spreading it out throughout the season,” said Tom McGee, President and CEO of ICSC. “While landmark holiday milestones like Black Friday and Thanksgiving Weekend remain important, it’s equally important for retailers to capture consumer interest throughout the season.”
Inflationary Impact Decreases
In September, Deloitte predicted that holiday retail sales would likely increase between 3.5% and 4.6% in 2023, according to its annual holiday retail forecast.
Overall, Deloitte’s retail and consumer products practice projects holiday sales will total $1.54 to $1.56 trillion during the November to January timeframe. In 2022, holiday sales grew by 7.6% in the same period.
Deloitte also forecasts e-commerce sales will grow between 10.3% to 12.8%, year-over-year, during the 2023-2024 holiday season. This will likely result in e-commerce holiday sales reaching between $278 billion and $284 billion this season.
“We expect healthy employment and income growth to keep the volume of sales growing for the 2023 holiday season,” said Daniel Bachman, Deloitte’s U.S. economic forecaster. “Inflation, which accounted for much of the increase in the value of retail sales last year, should moderate. This means the total value of retail sales will grow more slowly than last year. Our forecast also reflects a decreasing pool of pandemic-era savings, both of which will weigh on retail sales.”
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