What: Retail experts forecast modest holiday sales growth of 3.0%, reflecting a cautious consumer outlook influenced by economic uncertainties and changing spending patterns.

Why it is important: The modest growth prediction underscores the ongoing impact of economic factors on consumer confidence, with implications for retail strategies, inventory management, and overall economic health.

The holiday sales forecast for 2023 indicates a cautious consumer outlook, with experts predicting a 3.0% year-over-year growth. This rate, if realised, would be slightly below the average of 3.6% seen during the last expansion (2010-2019). The forecast reflects a combination of economic challenges, including softening labor markets, rising unemployment, and the absence of pandemic savings cushions. However, some positive factors persist, such as wage growth outpacing pre-pandemic levels and cooling inflation. The retail landscape is adapting to these conditions, with an elongated holiday shopping season and a shift towards more real (inflation-adjusted) consumer spending growth. This trend suggests that while foot traffic may increase, overall sales revenues might be tempered by moderating prices, presenting a complex scenario for retailers to navigate during this crucial sales period.

IADS Notes: The retail landscape is facing a complex set of challenges and opportunities as we approach the holiday season. U.S. holiday sales are forecasted to grow at their slowest pace since 2018, reflecting economic uncertainties and shifting consumer priorities. However, recent shopping events like Black Friday 2023 showed increased sales volumes, albeit with higher discounts, and a continued shift towards online and mobile shopping. This trend is set against a backdrop of consumer sentiment characterised by a state of stasis, where shoppers feel uncertain about the future despite current stability. Retailers are thus challenged to navigate these conflicting trends, balancing the need for competitive pricing and discounts with strategies to deepen consumer engagement and build long-term loyalty in an increasingly digital and value-conscious market.

Visa: US Consumers may face holiday headwinds this shopping season