U.S. retail sales are projected to reach an unprecedented $1 trillion mark this holiday season, reflecting a 4.5% increase compared to last year. This projection, based on a report by Bain & Company, primarily attributes the rise to inflation, which accounts for more than half of the nominal sales growth.
Projected Growth in Retail
According to Bain & Company’s findings, based on a survey of over 1,100 consumers, the growth in holiday retail sales this year will be uneven across different channels. In-store sales are anticipated to grow by 2.5%, while online sales are expected to see a significant increase of 9% year over year. The report indicates that nearly 24% of consumers intend to commence their holiday shopping using AI platforms such as Google Gemini, ChatGPT, and Claude—up from 17% last year.
Factors Influencing Consumer Spending
Despite the promising sales outlook, consumer spending power faces challenges from various factors, including elevated gas prices, tariffs, rising credit card debt, geopolitical uncertainties, and a tough job market. According to Aaron Cheris, partner at Bain & Company and global head of the firm’s retail practice, these issues might dampen retailers’ earnings even as they reach the trillion-dollar milestone this holiday season.
Shopping Preferences and Market Trends
Shoppers are expected to allocate their holiday purchases between online and offline shopping. Approximately 40% of survey respondents plan to balance their spending across both platforms, while 24% prefer predominantly online shopping and 13% choose primarily in-store purchases. Sales of home furnishings, electronics, appliances, and food and beverage are predicted to remain steady, whereas general merchandise, clothing, accessories, and e-commerce sectors may see growth in both prices and units sold.
Strategic Insights for Retailers
The holiday season presents an opportunity for retailers to optimise their strategies by balancing pricing, promotions, and leveraging new AI technologies to enhance customer experience and competitive standing, advises Cheris. Bain & Company’s projections hint at slightly better growth than last year, where a 4% rise pushed holiday sales beyond $975 billion.
Retailer’s Preparedness
Retailers appear to be well-prepared for the upcoming holiday rush, having managed inventory levels post the year’s peak shipping season. Jonathan Gold, Vice President for Supply Chain and Customs Policy at the National Retail Federation, noted in August that retailers were proactive, bringing in goods ahead of tariff reforms and other uncertainties like the ongoing challenges in Iran.
Reporting based on coverage first published by retaildive.com.