Deloitte Provides Optimistic Holiday Retail Sales Forecast

Deloitte has released its annual holiday retail forecast, in essence forecasting strong growth spurred by elevated consumer spending on services and continued growth in e-commerce sales.

According to Deloitte’s U.S. retail and distribution services practice, holiday focused retail sales, primarily focused on the period between November and January, are likely to increase between 7 percent and 9 percent in 2021. That would equate to range of $1.28 to $1.3 trillion during this period. As a reference, according to the U.S. Census Bureau, retail sales between November 2020 and January 2021 (seasonally adjusted and excluding automotive and gasoline sales) grew 5.8 percent to $1.19 trillion.

The forecast for E-commerce sales is forecasted to grow between 11 percent and 15 percent year-over-year, to a range of between $210 billion and $218 billion. E-commerce sales last year between the same period (seasonally adjusted and excluding gasoline stations, motor vehicles, parts dealers, and food services) grew 34.8 percent to $189 billion. Recall that in the 2020 time period, the U.S. was still dealing with the effects of COVID-19 coronavirus outbreaks and their impacts on people, businesses and product availability.

Deloitte’s U.S. economic forecaster Daniel Bachman noted:

“We anticipate strong consumer spending for the upcoming holiday season. As vaccination rates rise and consumers are more comfortable being outside of the home, we are likely to see increased spending on services, including restaurants and travel, while spending on goods will continue to hold steady. A steady decline in the savings rate to pre-pandemic levels will support consumer spending and keep retail sales elevated this season. Further, e-commerce sales will continue to grow as consumers demonstrate an ongoing and steady movement toward buying online across all categories”

Rod Stiles, Deloitte’s vice chairman and U.S. retail and distribution sector leader noted in part: “Retailers who remain resilient to shifting consumer behaviors and offer convenient options for online and in-store shopping, as well as order fulfillment, will be poised for growth this holiday season, and into the new year.”

The above stated, the significant unknown will be how much inventory can retailer’s position in warehouses to meet this year’s expected holiday period demand. The overall inventory-to-sales ratio remains historically low, and retailers are scrambling to ensure that inbound inventories can be positioned in time for holiday demand. As an example, at a recent investor conference, Walmart CEO Doug McMillon indicated that the retailer’s inventory levels were to light in stores and in E-commerce during Q2. Walmart has been chartering vessels to move inventories from overseas producers and avoid ongoing global shipping bottlenecks. Last week, the Ports of Los Angeles and Long Beach had upwards of 50 ocean container vessels stacked up awaiting a slot to be processed. This week, that number stands at upwards of 70 vessels awaiting processing. Likewise, port operations have been hampered by bottlenecks and slowdowns in inter-modal rail traffic moving containers inland and in trucking operations at the port.

Still to come and another reference point will be the annual holiday sales forecast issued by the National Retail Federation (NRF).

As Supply Chain Matters indicated in a previous industry commentary, precision planning and inventory management will be the determinant as to whether retailers and wholesalers can support this year’s holiday demand, or whether some holiday gifts may have to be delayed. One area of near certainty is that many holiday goods are going to be more expensive this year as a result of all of global supply chain imbalances in demand and available supply among multiple areas.

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