Anticipating a reopening economy and further distribution of COVID-19 vaccines, the National Retail Federation (NRF) is anticipating a banner year for retail sales.
In its annual forecast, the NRF expects retail sales to grow between 6.5% and 8.2% to more than $4.33 trillion. Early results from 2020 show that retail sales grew 6.7% over 2019 to $4.06 trillion, nearly doubling NRF’s forecast of at least 3.5 percent growth.
“Despite the continuing health and economic challenges COVID-19 presents, we are very optimistic that healthy consumer fundamentals, pent-up demand and widespread distribution of the vaccine will generate increased economic growth, retail sales and consumer spending,” said Matthew Shay, NRF president & CEO.
The 2020 November-December holiday season accounted for nearly one-fifth (19.4%) of overall annual retail sales. Retail sales during this period grew an unexpectedly high 8% to $787.1 billion. Non-store and other online sales represented $206.9 billion of total holiday sales, up 22.6% over the year before. The numbers exclude automobile dealers, gasoline stations and restaurants.
The NRF forecasts online sales, which are included in the total, to grow between 18% and 23% to between $1.14 trillion and $1.19 trillion.
“The trajectory of the economy is predicated on the effectiveness of the vaccine and its distribution,” said Jack Kleinhenz, NRF’s chief economist. “Our principal assumption is that that the vaccination will be effective and permits accelerated growth during the mid-year. The economy is expected to see its fastest growth in over two decades.”
He noted that 2021 marks the second year of savings, record-high stock valuations, increased home prices, enhanced government support and record low-interest rates, which are all contributing factors towards the economy and consumer spending behavior.
Additionally, Kleinhenz said households will still consume retail goods but will turn to services as they are able, which normally accounts for 70% of consumer spending. While the pandemic has precipitated broader adoption of multichannel services for the retail industry, households are becoming attached to the convenience and product selection of buying online.