Christmas 2021 may be one for the record books

Photo: RetailWire
Oct 28, 2021

The National Retail Federation is predicting that retailers will set new sales records for the 2021 Christmas season.

The trade industry group expects sales in November and December to grow between 8.5 percent and 10.5 percent over 2020. If these numbers pan out, it would be all the more remarkable considering that retail sales for the last two months of 2020 grew 8.2 percent, setting the current percentage record. As a further point of comparison, the average annual increase in sales over the past five years has been 4.4 percent.

NRF expects that online and other non-store sales will grow at a faster rate than in-store, with gains in the 11 percent to 15 percent range. That said, the widespread distribution of COVID-19 vaccines across much of the country as well as safety lessons learned during the pandemic mean that more consumers will be shopping in stores this holiday season than they were in 2020.

“The outlook for the holiday season looks very bright,” said Jack Kleinhenz, NRF chief economist. “The unusual and beneficial position we find ourselves in is that households have increased spending vigorously throughout most of 2021 and remain with plenty of holiday purchasing power.”

Mr. Kleinhenz said that ultimate success for retailers will be tied to their inventory positions.

“Pandemic-related supply chain disruptions have caused shortages of merchandise and most of this year’s inflationary pressure,” he said. “With the prospect of consumers seeking to shop early, inventories may be pulled down sooner and shortages may develop in the later weeks of the shopping season. However, if retailers can keep merchandise on the shelves and merchandise arrives before Christmas, it could be a stellar holiday sales season.”

Other wild cards cited in NRF’s forecast are changes in the current transmission rate of the Delta variant, labor shortages and the weather.

NRF expects retailers to hire between 500,000 and 665,000 seasonal workers this year, up from 486,000 in 2020. A number of retailers began hiring earlier this year and encouraged consumers to shop early to avoid shipping delays and inventory shortages.

The weather forecast is favorable for merchants as the National Oceanic and Atmospheric Administration is predicting a La Niña weather event, which has been tied to stronger retail sales in the past.

DISCUSSION QUESTIONSs: Are you expecting a record setting Christmas for retailers this year? What factors give you the most optimism and reasons for concern?

Please practice The RetailWire Golden Rule when submitting your comments.
"Pent-up demand and 'revenge spending' will likely propel Holiday 2021 into the record books."
"The numbers don’t lie and sales are up as retailers continue to encourage customers to shop early. Promotions have been brought forward and stores are busy."
"The virus seems to be waning at just the right time. In my experience people are already out in the stores shopping."

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15 Comments on "Christmas 2021 may be one for the record books"

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Mark Ryski

Yes, I agree that it will be a robust holiday season. While the NRF always tends to lean to the optimistic, I think their prediction is directionally correct. The many supply chain and labor headwinds are being mitigated by strong consumer confidence and pent-up demand. Furthermore, vaccination rates continue to climb, and people have come to work around COVID-19 in their daily lives.

Michael La Kier

Pent-up demand and “revenge spending” will likely propel Holiday 2021 into the record books. With reduced travel and events, people have more money. After 18+ months of forced austerity spending people are ready to spend to enjoy the holidays.

Jeff Sward

I have no argument about the demand being there. But how that demand manifests itself into sales and maintained margins is a total coin toss at this point. Especially when played all the way through to January and February. The final on-floor date of late seasonal product will drive how much of that inventory can be sold at originally planned prices and margins. We could have clearance on winter product running well into February and March. And then what will be the status of spring product be? On time, or also late? I find it very difficult to be rosy and cheerful about the apparel side of this conversation.

Liza Amlani

Christmas will come early this year for retailers with the push for customer to shop sooner rather than later.

The numbers don’t lie and sales are up as retailers continue to encourage customers to shop early. Promotions have been brought forward and stores are busy.

However empty shelves are inevitable as we approach peak and with current supply chain challenges, many retailers won’t have stock to pull forward but this could be an opportunity for retailers to get rid of aged and excess inventory.

Melissa Minkow

This year’s holiday shopping data should be record-breaking as consumers are still on a spending streak and are excited to be able to spend the holidays in person with loved ones. The fact that retailers have also implemented an array of omnichannel services to accommodate eager holiday shopping attitudes means consumers are equipped to make as many online or offline store visits as needed to get what they want. Stockouts are the only real threat to holiday spend, but shoppers have learned that they can always find something in a pinch.

Neil Saunders

It will be a very robust holiday season. Not only are consumers determined to enjoy themselves – after a more subdued celebration last year – they also have more cash to spend on retail. A lot of this is coming from the continued curtailment of other activities such as travel and entertainment and this diversion of spend has been helping retail all year. However the challenge this year isn’t one of demand, it will be one of supply!

Lisa Goller

Yes, Christmas 2021 will smash retail sales records.

Factors fueling growth:

  • Parties are back: Consumers are allowed to celebrate in person, necessitating more gift-giving;
  • Disposable income: Budgets for travel, events, sports and entertainment are overflowing due to limited use over the past year a half. Luxury and premium goods will see a lift;
  • Supply and demand: Popular and scarce products will command a premium.

Reasons for concern:

  • Global shipping chaos: Reliable supply chains will win;
  • Inflation: Consumers may limit spending, and hold out for deals and discounts;
  • Labor shortage: We will soon know how much the Great Resignation disrupts retail operations.

Overall, 2021’s celebratory mood and companies’ ability to earn higher margins will fuel growth.

Gary Sankary

The virus seems to be waning at just the right time. In my experience people are already out in the stores shopping. I expect a good holiday season for retail. Of course assuming inventory is there to support demand.

Lee Peterson

All the ingredients are in place for a big one, for sure. The key to the question though is the last two months, as early shopping is absolutely one of those ingredients. But the main factor to me is the now well-developed multiple purchase choices put in place by just about every retailer: e-commerce, store, BOPIS, fast delivery, etc. You can truly get anything you want any time and any way you want pretty smoothly for the first time. Given the fact that most brands have planned ahead in terms of logistic hassles, I don’t see that being as big a problem as the drama press does. Apparel may be most affected by that but, overall, this should indeed be a whopper.

Dick Seesel

Online shopping has outpaced in-store sales in recent years (especially in 2020, as you might expect) and will probably do the same this year — but brick-and-mortar volume will have a nice rebound from shoppers eager for experiential retail.

Will this be a big holiday season vs. 2020? Of course it will, but 2019 will be a more accurate benchmark. Those of us who started our retail careers in the 1970s know that inflation can actually be the friend of comp-store sales, but the widespread shortages expected this year could cast some rain on the parade.

Kathleen Fischer

Pent-up demand and a desire to “get back to normal” will fuel spending but while the demand will be there, will the supply be there to meet it?

Ananda Chakravarty

There will be record sales for sure.

Reasons: pent up demand, more confidence in vaccines, increased online sales, extensive marketing campaigns, smart retailers pre-stocking high demand items, more discretionary wealth, retailers starting holiday sales earlier this year, and potential inflationary threats increasing costs (especially high value items).

Things that could turn the tables: another COVID-19 variant, tighter export controls, high return rates, government lockdowns, further port congestion.

As long as we avoid the latter factors I would expect a fantastic retail Christmas season. Even if these factors come into play, the buying will just be pushed out into 2022. Consumer pent-up demand is extremely high combined with excess cash in the bank. Great recipe for retail.

Patricia Vekich Waldron

Early shopping and pent-up demand will fuel a strong holiday shopping season. Retailers that can fulfill on demand — with products, service and convenience — will gain more share and loyalty.

Shikha Jain
I think it is clear there has been pent up consumer demand that will drive a record setting Christmas season. The challenge for retailers will be to fully capture this demand: Supply Chain: While the original article from NFR mentions retailers’ investments in supply chain systems, the sudden surge for the holidays paired with backlogs in the US ports + shipping challenges will leave retails little room to move if they require more inventory; Employment: COVID has changed the purchasing landscape permanently to give Online Sales the edge, but some consumers are returning to in-store purchasing for the holidays. Retailers may struggle to hire seasonal workers amidst a more structural hiring challenge they’ve been facing all year. The retailers about to meet these challenges will be most successful: Early commitment: Retailers able to implement and communicate earlier promotions to beat the Black Friday and Christmas rush could push through orders before supply chains become even more constrained for the season; Shift to proof of purchase: With growing consumer awareness of supply chain constraints, would there… Read more »
Anil Patel

I am confident that retailers will have a great Christmas season this year in terms of demand. Consumer sentiment is rising thanks to a number of variables including pent-up demand, revenge shopping, people returning to their usual lives, money saved during lockdowns, and the oncoming La Niña.

During the epidemic, consumers established new habits of shopping from anywhere and having it delivered anywhere. This could be a substantial barrier for merchants who have not yet adopted omnichannel commerce, aside from supply chain issues. A solid retail model that includes a cost-effective fulfillment model and real-time inventory visibility across channels can assist retailers in overcoming supply chain constraints, which are expected to be a key cause of retailers’ problems this holiday season.

"Pent-up demand and 'revenge spending' will likely propel Holiday 2021 into the record books."
"The numbers don’t lie and sales are up as retailers continue to encourage customers to shop early. Promotions have been brought forward and stores are busy."
"The virus seems to be waning at just the right time. In my experience people are already out in the stores shopping."

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