Each year, holiday shopping is more and more an online event, and that shift will continue in 2023, the National Retail Federation predicted on Nov. 2.

NRF projects online shopping will grow by 7% to 9% in November and December to between $273.7 billion and $278.8 billion, up from $255.8 billion last year. Overall retail sales during the winter holiday period will increase by 3% to 4%, to between $957.3 billion to $966.6 billion, an increase from $930 billion.

Taking the midpoint of NRF’s forecast for both online and overall holiday sales, that suggests more than 62% of the retail sales growth this holiday season will occur online, with online growing about $20 billion and overall retail sales by $32 billion, Digital Commerce 360 calculates. That would put sales growth in brick-and-mortar stores at under 2%.

The NRF projection excludes sales at vehicle dealers, gasoline stations and restaurants to focus on core retail.

NRF executives said on a conference call that consumer spending has been resilient, buoyed by a strong job market.

“Overall household finances remain in good shape and will continue to support the consumer’s ability to spend,” NRF president and CEO Matthew Shay said on the conference call.

But they also noted that retail growth is likely to soften a bit in the holiday season and early 2024 under the impact of inflation, rising interest rates, political turmoil in Washington and disturbing geopolitical events.

“We expect spending to continue through the end of the year on a range of items and experiences, but at a slower pace,” added NRF chief economist Jack Kleinhenz. “Solid job and wage growth will be contributing factors this holiday season, and consumers will be looking for deals and discounts to stretch their dollars.”

Online is the most popular place to shop for the holidays

58% of consumers plan to shop online during the holiday season, according to an annual survey by the NRF and market research firm Prosper Insights & Analytics, making it the most popular shopping channel. Department stores were second at 49%. That percentage planning to go online to shop for holiday items is up modestly from 56% in the same survey in 2019, the last year before the pandemic hit.

The survey, released today with the NRF forecast, also showed 92% of U.S. adults plan to shop for the holidays and that 43% planned to start their shopping before November, in line with last year’s survey. Shay says retailers have responded to the trend toward earlier holiday shopping by offering deals and discounts as early as the summer months, pulling forward some holiday sales.

Shoppers, on average, plan to spend $875 on holiday-related purchases, the survey shows, a $42 increase from last year. Of that, $620 will be spent on gifts and the rest on decorations, food and other items.

Gift cards will continue to be the most popular gift, with 55% of holiday shoppers saying they would like to receive them, the survey shows. That’s followed by clothing or accessories (49%), books, video games or other media (28%) and personal care or beauty items (25%.)

Prosper Insights & Analytics surveyed 8,103 adults between Oct. 2-9.

Some holiday retail sales forecasts are higher, others lower

The NRF’s prediction for ecommerce growth falls in the mid-range of forecasts released by several firms. At the high end, consulting and accounting firm Deloitte has projected online holiday growth of between 10.3% and 12.8% and market research firm Insider Intelligence 11.3%. On the low end, retail research firm Consumer Growth Partners predicts growth of online retail at 5.1% and software company Adobe Inc. 4.8%. In the middle, Forrester Research projects year-over-year online retail growth of 8.4%.

Deloitte’s projection is for November through January; the other firms’ predictions are for November and December.

The NRF forecast is in line with the growth in U.S. online retail sales in the first half of 2023, which came in at just under 8%. Online retail growth has been in that range for several quarters, including the last quarter of 2022, when it grew by 7.7%, according to the U.S. Department of Commerce.

The NRF forecast also aligns with overall retail growth, which has been 3.7% for the first nine months of 2023. Kleinhenz pointed out today that retail sales growth averaged 3.6% annually in the decade before the COVID-19 pandemic hit the U.S. in 2020, indicating a return to normal patterns.

The NRF projection for online growth also mirrors growth this year in nonstore sales, which are mainly online but also include purchases via mail order, phone and vending machines. For the first nine months of the year, nonstore sales as reported by the Commerce Department grew 7.9% versus 4.2% for sales at brick-and-mortar stores.

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