Holiday shoppers are expected to spend their way to another record year even with inflation and debt worries shadowing their expenditures.
That's the consensus among retail analysts and economists, with retail stores still commanding the largest slice of holiday sales that began in mid-October and will end on Dec. 31.
For example, Insider Intelligence projects an overall 4.5% jump in sales to $1.32 trillion with brick-and-mortar stores capturing 80.7%, or $1.06 trillion, of those sales.
Online and mobile sales are projected to be at $255.7 billion, up 11.3%.
"This year will see many pre-pandemic shopping patterns return, with healthy consumer spending expected and more typical growth rates across shopping channels," Insider Intelligence said.
"Consumers are ready to spend, but their dollars will need to be earned."
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Michael Walden, an N.C. State University economics professor, projects that while "households will spend more than last year, the gain will be the smallest in four years."
"The reasons: households have gone through their COVID savings, they are facing higher credit costs, and they have been on a buying binge for two years, so they just don’t need as much."
Although the National Retail Federation's forecast is for a 3% to 4% gain in overall holiday sales, it is not calling for surpassing $1 trillion quite yet at between $957.3 billion and $966.6 billion. Its holiday shopping season is measured between Nov. 1 and Dec. 31.
"Every retail holiday season since the pandemic has been unique, and that will be the case again this year," NRF chief economist Jack Kleinhenz said.
Kleinhenz said holiday shopping in 2022 was influenced primarily by consumers turning to savings built up during the COVID-19 pandemic that provided a buffer against rising inflation.
“The staying power of the American consumer has been the story of 2023.
"But, financial conditions have tightened appreciably in recent months, curbing the purchasing power fueled by job and wage gains. Nonetheless, continued consumer resilience is still expected for the holiday season.”
Black Friday prevails?
Black Friday traditionally has marked the day when many retailers begin turning a profit for the year, and their financial numbers shift from red ink to black.
In recent years, it has been the second-busiest day of the in-person shopping season, following the Saturday before Christmas.
After 10 years of Turkey Day doorbusters chipping away at Black Friday spending, most big-box and discount retailers have chosen to be closed on Thanksgiving and return to 5 to 9 a.m. Black Friday openings.
Among retailers who are holding to Turkey Day shopping include Bass Pro Shops, Big Lots and Old Navy.
KPMG's holiday shopping season found that 45% of survey respondents said they will definitely shop on Black Friday, while just 13% definitely on Turkey Day.
Yet, the 2022 High Point University Poll on holiday shopping found that Cyber Monday could trump Black Friday.
When asked about choosing between the two, more poll respondents said they would be shopping Cyber Monday at 40% than Black Friday at 20%. About 25% of respondents said they would not shop either day.
The International Council of Shopping Centers are projecting a 3.8% jump in holiday retail sales to more than $1 trillion for the fourth quarter of the year.
The ICSC survey of consumers determined that 87% are expected to shop in person holiday season, while 75% will make purchases online.
"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," ICSC said.
Discount department stores remain the most popular stop for 63% of shoppers, while traditional department stores are second at 34% and electronics stores at 22%.
“We expect a positive holiday shopping season this year as consumers continue to spend in spite of economic headwinds,” said Tom McGee, President and chief executive of ICSC.
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. That reflects "continued and consistent spending while navigating economic pressures like inflation and higher interest rates."
“This year will continue the trend of consumers starting their holiday shopping earlier and spreading it out throughout the season,” McGee added.
“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."
Mark Owens, president and chief executive of Greater Winston-Salem Inc., encourages local consumers to save a portion of the holiday shopping budget for Small Business Saturday spending.
"While we recognize the challenges facing households, there are some positive signs with employment and annual household income both growing in Forsyth County," Owens said.
"People look forward to the holiday season, and it is an important time for our local establishments, so I hope people will consider shopping and dining locally as they celebrate the season with family and friends."
Local thoughts
Local consumers may be shopping "more cautiously" this year, said Roger Beahm, a marketing professor in the Wake Forest University School of Business.
"First, inflation has reduced what shoppers can get for the dollars they are spending," Beahm said.
"This, in turn, prompts them to be more cautious in various ways: what they buy, where they buy, when they buy, and even how they pay.
"This more cautious attitude is translating to even greater consumer interest this year in buying holiday gifts that are on sale," Beahm said.
Beahm said most holiday shopping surveys have determined that while overall spending may increase, consumers are trimming how many people they buy for.
"According to Deloitte’s holiday retail survey, one way that consumers say they are planning to stay within budget this year is by buying fewer gifts," Beahm said.
"This would make sense as consumers are concerned about staying within their budgets. Rather than give up quality in the gifts they buy this year, consumers say they would be willing to reduce the quantity of gifts they give."
That trend has "major implications for retailers who are concerned about moving products off their shelves," Beahm said.
"It could mean more merchandise left on hand after the holidays. This can be good news for shoppers, as it would likely translate into even more-aggressive discounting after the holidays."
Michael McCully, an associate economics professor at High Point University, said he expect higher interest rates on credit cards will curtail some spending exuberance.
"Prices on average are up about 4% compared to a year ago," McCully said. "Consumer debt is rising, and the moratorium on student loan repayment is over."
Yet, thanks in part to more employers increasing their minimum wages, McCully said that lower-income households have seen wages rising faster than current inflation and middle- and higher-income households have enjoyed a large increase in wealth."
"The stock market and housing market remain much higher than before the pandemic."
McCully said another ripple effect is that more individuals will be doing what he called “catch-up” spending on traveling and dining.
"During the pandemic, it was difficult to travel or eat out, and people were reluctant to spend on luxuries," McCully said. "Consumers felt their standard of living was diminished.
"In response, travel spending is now booming, and if possible, consumers are indulging themselves again - high-end furniture and decorative items, jewelry, expensive wines, etc."