< back to insights gallery

Consumer products holiday season insights: Retail holiday shopping expected to be strong this year

REAL ECONOMY BLOG | November 07, 2022 | Authored by RSM US LLP

With the holiday shopping season already begun, RSM forecasts nominal retail sales from October through December to increase between 6.5% and 8.0% on a year-over-year basis.

Given that October retail sales are set to be released on Nov. 16—and because of a shift in consumer and retailer shopping strategies to stage promotional events in October outside of traditional Black Friday and Cyber Monday promotional events—we are defining the holiday shopping season as October through December for this forecast.

Holiday retail sales

With inflation continuing to run hot—coming in at 7.1% and 10.8% on a year-over-year increase in durable and nondurable goods, respectively, in the September consumer price index reading—we expect to see this reflected on real sales (volumes).

While consumers have largely absorbed this pricing pressure throughout the pandemic and subsequent recovery, keeping real sales growth in positive territory throughout last year, this year has been a different story.

Real retail sales growth has declined in five of the first eight months of the year. While our forecast projects nominal sales growth on a year-over-year basis, as the chart below indicates, real sales will continue to be affected by inflationary pressure.

We expect the narrative for retailers and consumer goods companies expressed over recent public earnings calls will continue, with nominal sales growth combined with margin compression for the remainder of the year.

Real retail sales

While consumers are faced with an uncertain economic environment, there are several tailwinds that should support our nominal sales growth forecast. Note the following.

Elevated savings

With more than $1 trillion in excess savings in real dollars, compared with January 2020, consumers have the cash on hand to spend throughout the holiday season if they choose to. While most of this savings is held with upper-income households, being that these households account for roughly 60% of overall consumer spending, the tools are available for consumers to tap these funds for the remainder of the year. With a 65% chance of recession in 2023, consumers are unlikely to pull back on discretionary spending until they are forced to.

Lower gas prices akin to cash stimulus

While gas prices have begun to increase from September lows, as of this writing, average gasoline prices in the United States for unleaded fuel are more than 20% lower than the peak in June based on data from the American Automobile Association. This reduction is akin to a cash stimulus for consumers who dipped into savings over the summer when gas prices averaged more than $5 per gallon. Lower gas prices will benefit those in the lower income tiers and provide the resources for more spending on discretionary desires.

Increased promotional activity

While retailers and wholesalers continue to work through elevated inventory levels (22.2% and 24.5% higher than one-year ago, respectively), we expect elevated promotional activity for the remainder of the year as companies work to align inventory levels with sales forecasts. Companies will look to incentivize customers who are clamoring for deals after sustained inflationary pressure, to help offload much of the excess inventory that arrived from foreign manufacturers this year. We expect more frequent and deeper promotional activity for the remainder of the year, especially on nondurable, fast-moving products. Consumers should not expect meaningful discounts on premium brands however, because those companies must juggle elevated inventory with the long-term impact to the brand by discounting the premium product.

The takeaway

The holiday shopping season is expected to continue to show strong nominal spending by consumers. While volumes will most likely not increase in the same level as nominal sales this holiday season, we do not expect consumers to dramatically shift their spending habits. The holidays are likely to be shaped by the volume and depth of promotional activity to drive sales that have shifted away from goods throughout the year.

Look for additional insights as we continue our consumer products holiday season series.

Let’s Talk!

Call us at (541) 773-6633 (Oregon), (208) 373-7890 (Idaho) or fill out the form below and we’ll contact you to discuss your specific situation.





  • Topic Name:
  • Should be Empty:

This article was written by Mike Graziano and originally appeared on 2022-11-07.
2022 RSM US LLP. All rights reserved.
https://realeconomy.rsmus.com/consumer-products-holiday-season-insights-retail-holiday-shopping-expected-to-be-strong-this-year/

RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/aboutus for more information regarding RSM US LLP and RSM International. The RSM(tm) brandmark is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.

KDP Certified Public Accountants, LLP is a proud member of RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.

Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources.

For more information on how KDP LLP can assist you, please call us at:

Oregon Office:
(541) 773-6633

Idaho Office:
(208) 373-7890