Retailers can expect to see 3.0% to 3.5% growth in retail sales this holiday season, as deals and discounts continue to shape consumer behavior
Retail sales are expected to grow 3.0% to 3.5% this holiday season, according to ICSC’s 2024 holiday shopping forecast. ICSC projects a 6.0% increase in food-and-beverage sales as well, bringing the total expected spend for the season to $1.66T. In addition to the forecast, ICSC also released the results of its Annual Holiday Shopping Intentions Survey, which found that 241 million (92%) consumers plan to shop this year – six million more than in 2023 and the highest percentage since 2019.
“Interest rate cuts and easing inflation are taking some pressure off holiday shoppers, but other macro factors – like geopolitical turmoil and the upcoming presidential election – are still at play.”
“This year has shown a more reserved, yet resilient, consumer as an uncertain economic landscape and sensitivity to higher prices have impacted many households,” said ICSC President and CEO Tom McGee. “At the same time, falling inflation and steady consumer spending have kept retail sales on solid footing throughout the year, and we anticipate another strong holiday shopping season.”
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Holiday shoppers plan to spend an average of $706 on gifts and related items – the most since 2018. Yet despite lower inflation, higher prices continue to weigh on consumers. In fact, nine in 10 holiday shoppers said inflation will impact their purchases – and 37% of shoppers said they plan to spend more this year with 42% attributing it to higher prices.
In response to higher costs, most consumers plan to spend more time looking for deals; nearly half plan to take advantage of deals and promotions, and 68% agree that searching for discounts or exclusive offers during the holiday season will encourage them to make more trips to physical stores, an increase of seven percentage points over last year. Others are turning to loyalty programs to save, with 65% of respondents expecting membership and rewards programs to influence their purchases.
Physical stores continue to play a major role in holiday shopping. Ninety-two percent of shoppers will spend in a physical store. Brick-and-mortar remains a valuable driver of omnichannel shopping, as nearly all in-store shoppers also plan to buy online from the same retailer’s website, with almost half saying that browsing in stores will influence their purchases. Visiting malls and shopping centers to shop, dine, and take advantage of other experiences and services is also a mainstay of the holiday season for 200 million consumers, led by Gen Z and Millennials.
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Consistent with recent years, 78% of holiday shoppers plan to start shopping for the holidays earlier than they normally would – and half of those cited early deals and promotions as a top reason. This year’s survey also showed an increase of 10 percentage points in the number of people who expect to complete their shopping in the first half of December and a decrease of 14 percentage points in those planning to finish in the second half of the month – suggesting a busy spending period in the two weeks following Thanksgiving.
Most consumers will shop for gifts at discount department stores (63%) and traditional department stores (33%). Gift cards (58%) remain the most popular category for gift purchases, followed by apparel, accessories, and jewelry (52%), and toys and games, sporting goods and other hobbies (50%). Consumers also anticipate gift shopping for experiences like restaurants and dining (25%), experiential activities (16%) and personal services (14%).
“Despite economic headwinds, 70% of holiday shoppers feel their financial situation is better than or the same as this time last year, signaling measured optimism among consumers,” said McGee. “Interest rate cuts and easing inflation are taking some pressure off holiday shoppers, but other macro factors – like geopolitical turmoil and the upcoming presidential election – are still at play.”