“We are very optimistic that healthy consumer fundamentals, pent-up demand and widespread distribution of the vaccine will generate increased economic growth, retail sales and consumer spending,” said Matthew Shay, NRF president and CEO. “From the outset of the pandemic, retailers have gone above and beyond even the most conservative safety guidelines to protect and serve their associates and consumers alike.”
Early results show that retail sales in 2020 grew 6.7% over 2019 to $4.06 trillion. This figure compares with 3.9% growth in 2019. Online sales, which are included in the total figure, grew 21.9% to $969.4 billion as consumers shifted to e-commerce.
The 2020 November-December holiday season accounted for nearly one-fifth of all overall annual retail sales. Retail sales during this period grew an unexpectedly high 8% to $787.1 billion. Online sales represented $206.9 billion of those total holiday sales, up 22.6% over last year.
NRF forecasts that 2021 retail sales will total between $4.33 trillion and $4.4 trillion, and online sales, which are included in the total, will grow between 18% and 23% to between $1.14 trillion and $1.19 trillion. This is the highest level of growth that’s been seen since 2004, when retail sales grew 6.3%, according to Shay.
“The trajectory of the economy is predicated on the effectiveness of the vaccine and its distribution,” said Jack Kleinhenz, NRF chief economist. “Our principal assumption is that that the vaccination will be effective and permits accelerated growth during the mid-year. The economy is expected to see its fastest growth in more than two decades.”
Additionally, Kleinhenz said retail sales has benefitted from a shift from services to goods during the pandemic. With the return to more normal conditions, Kleinhenz said households will still consume retail goods but will turn to services as they are able, which normally accounts for 70% of consumer spending. He added that new home sales are up 4.3%, which shows the consumer has purchasing power.
Kleinhenz said consumers should expect to see price increases in the retail sector largely as a reflection of supply and demand situations.
The recent logistics challenges due to increased demand have made visible the aging infrastructure and shortcomings with several U.S. ports, according to Shay, who said, “Container ships are idling for days and weeks not being unloaded, which needs to be improved.”