Sure, prices are high and many goods are scarce. But a national retail trade association says inflation and supply-chain headwinds won’t keep us from setting a record for holiday spending this year.
The National Retail Federation (NRF) predicts that sales this November and December will grow between 8.5% and 10.5% over last year to a record total of $843 billion to $859 billion, fueled by consumers’ rising incomes, pent-up savings, and increased flexibility.
“Because consumers are motivated to engage in the holiday season this year, and they have the financial ability to do so, we think they’ll still participate in the holiday season even if they need to switch to another item or trade among different goods because their first choice may not be available,” said NRF President and CEO Matthew Shay in a media call.
Early in the pandemic, when consumers rushed to buy household items like toilet paper and cleaning supplies only to find those items out of stock, many showed resilience in switching away from their favorite brands, Shay said. That initial change in mindset continued, and consumers have become more flexible now in everything they buy. Many are also willing to pay higher prices for some items because they want to spend, and can afford to, with built-up savings from stimulus checks.
Some others, however, aren’t so flush. Households with lower incomes are planning to spend less this holiday, a recent Deloitte survey showed, and half of them said the rising cost of food was a big reason why. Though Shay said 77% of the people his organization surveys believe inflation is a concern after seeing prices increase this year, he doesn’t think that will deter them from robust holiday spending.
“We have to take some of that with a grain of salt, because we know sometimes their attitude and actions are moving in two different directions,” he said.
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