NRF’s 2020 holiday sales forecast points to busy times for warehouses

While so many things are uncertain these days, one thing that does not fall into that category is the positive trends United States retail sales have seen, of late, which are expected to continue through the holiday shopping season. That was a key takeaway from the National Retail Federation (NRF), which issued its holiday sales forecast yesterday.

NRF defines the holiday shopping season as being comprised of holiday retail sales for the months of November and December, excluding sales data from automobile dealers, gasoline stations, and retailers.

And, for the 2020 holiday season, NRF is bullish about things being strong on the holiday sales front, calling for an expected 3.6%-to-5.2% annual gain, to between $755.3 billion and $766.7 billion in total sales. In 2019, total U.S. holiday retail sales saw a 4% annual gain, to $729.1 billion, with holiday sales seeing an average annual gain of 3.5% over the last five years.

Not surprisingly, non-store, or online/e-commerce sales continue shine, due to a meshing of changing consumer shopping habits and the impact of the ongoing COVID-19 pandemic, among other factors, with sales pegged to see a 20%-to-30% increase between $202.5 billion and $218.4 billion, well outpacing 2019’s $168.7 billion tally.

On balance, NRF noted that going back June, retail sales are seeing a “V-Shaped” recovery, as retail sales have seen both sequential and annual gains over that period. In October, NRF reported a 10.6% annual retail sales gain, and on a year-to-date basis through October, retail sales are up 6,4% annually. And online sales, it added, saw a 36.7% annual uptick, pointing to how myriad households are expected to turn to shopping online, including at locations owned by traditional brick and mortar retailers.

NRF President and CEO Matthew Shay said on a media conference call today that 2020 has been unique and this year is expected to be a holiday season unlike any other, as it has dealt with the trio of the pandemic, the election, and civil unrest, and has created challenges. And he also lauded the emphasis and priority that retailers placed on the health and safety of their teams, customers and communities where they work and live, going back to the onset of the pandemic, with retailers serving these communities on the front lines.

“Retailers are doing more than is even required, and that is a central feature of success of retail and the consumer confidence we have seen restored and the very robust consumption that has taken place over the last six months,” he said. “It is because consumers can tell retailers have taken great lengths to guarantee safety in those places of business and are going to continue to be prepared to serve them, as we move into the holiday season.”

And, from a learning perspective, he observed that retailers have continued to learn how to adapt to meet consumer demand, with myriad examples of innovation and agility, through things like enhancements to the supply chain and fulfillment, digital engagement, payments, and others, which Shay expects to continue through the holiday season.

“Our outlook is very bright for the holiday season,” he said. “Consumers have responded positively to other holidays throughout this year…we have seen consumers very engaged, looking for opportunities to celebrate and have moved into real consumption mode around the holidays. We think that is a good indicator of the behavior we will see this year. Retailers have embraced an earlier start to the holiday season and have been planning ahead for many months to serve consumers in this changed environment. That means everything was pulled forward, and we saw a number of major shopping events take place in October four-to-six weeks earlier than we would normally see. We saw inventory on shelves and promotions and discounts and seasonal staff hires taking place much earlier than normal.”

NRF Chief Economist Jack Kleinhenz said on the call that 2020 retail sales could exceed the forecasted range or come in below the range, depending on how the contours of the economy develop.

“There is no doubt that we are in the most unusual economic environment in our lifetimes,” he said. “I cannot think of a period with so many simultaneous factors hitting the economy at once when formulating this forecast.”

The NRF’s economist added that there is uncertainty about consumers’ willingness to spend, but with the economy improving most have the ability to spend.

“Consumers have experienced a difficult year but will likely spend more than anyone would have expected just a few months ago,” noted Kleinhenz. “After all they’ve been through, we think there’s going to be a psychological factor that they owe it to themselves and their families to have a better-than-normal holiday. There are risks to the economy if the virus continues to spread, but as long as consumers remain confident and upbeat, they will spend for the holiday season.”

Given how people have not been going on vacations or making purchases on services-based goods, it stands to reason that the NRF’s forecast will hit its projected range. But one cannot forget to see that the impact, and presence of logistics, at just about every phase of a retail shippers’ ecosystem, and by extension, for customers, too, is prevalent.