Holiday retail sales are expected to grow by 2.9% to 3.4% this year, helped by continued strong growth in ecommerce, according to the Deloitte holiday forecast.
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Holiday retail sales are expected to increase by 2.9% to 3.4% and total $1.61 trillion to $1.62 trillion, according to Deloitte’s 2025 holiday forecast, released today.
The global accounting and advisory firm is predicting that disposable income gains, and resilient consumers will lead to some $40-$45 billion more in holiday spending this year.
Deloitte is forecasting sales growth will be below last year’s increase of 4.2%.
Deloitte said it is anticipating disposable personal income to grow between 3.1% to 5.4% this holiday season and noted that it has found disposable income growth to be a sound predictor of retail and ecommerce sales.
Steady income growth “can help offset some economic uncertainty, including any labor market weakness and the burden of high credit card and student debt on consumer spending,” Deloitte Insights economist Akrur Barua said in releasing the results.
Ecommerce Sales Forecast To Exceed $305 Billion
Ecommerce sales are expected to grow by 7% to 9% during the holiday season, and total between $305 billion and $310.7 billion.
This initial forecast by Deloitte is based on economic calculations and does not reflect consumer trends or consumer expectations about holiday spending plans. Its report on consumer trends, based on its holiday spending survey, will be released next month.
A Return to Pre-Pandemic Growth
This year’s forecast of 2.9% to 3.4% growth “is more in line with historical averages we used to see in holiday before the pandemic, when we really saw these bigger spikes in holiday spending,” Brian McCarthy, a principal in Deloitte’s retail strategy and analytics practice, said in an interview.
The expected slower pace of growth this year is a signal to retailers to be aware of the need to emphasize their value proposition, offer competitive pricing, and be thoughtful about when and where they launch promotions, McCarthy said. Private-label products and domestically manufactured products also are likely to be things consumers are looking for this season, he said.
In making its economic forecast, Deloitte tracks a number of wage and income indicators, McCarthy said. The forecast also factored in two expected interest rate reductions.
“Even if that doesn’t immediately play into consumer savings and spending ability, there’s still the sentimental impact that will have,” McCarthy said. “It may make consumers continue to feel confident that there’s a little bit more they could spend on holiday than they would otherwise,” he said.
Consumers Often Exceed Expectations
Last year Deloitte’s holiday forecast predicted sales growth of 2.3% to 3.3% and consumers delivered an upside surprise of 4.2%.
In recent holiday seasons, consumers have proven to be more resilient than economic indicators would suggest, McCarthy said.
“We’ve been facing higher inflation. Consumers say that they feel a little less confident. And yet they continue to show up and they continue to spend,” he said.
Retail spending in the holiday period from November to January could be impacted by the fact that a significant amount of holiday-related spending may occur before November, as consumers shop earlier because of concerns about possible price increases.
Last week, accounting and professional services firm PwC released the findings from its holiday consumer intentions survey, which showed that Americans, for the first time since 2020, are saying they plan to spend less during the holiday season than they did the previous year.
While overall average consumer spending is expected to drop 5%, Gen Z respondents (ages 17 to 28) said they plan to cut their holiday budgets by 23% – more than any other generation. “That means retailers could be fighting harder for a smaller pool of Gen Z’s discretionary dollars this season,” PwC reported.