Holiday retail sales in the U.S. are expected to experience their slowest growth in six years, according to a new report from Deloitte. The combination of persistent inflation and dwindling personal savings is leading consumers to adopt a more frugal approach during the critical shopping season from November 2024 to January 2025. Deloitte forecasts that holiday sales will increase by 2.3% to 3.3%, bringing the total to as much as $1.59 trillion, a noticeable slowdown from the 4.3% growth recorded in 2023.

Changing Consumer Behavior: A Focus on Bargains

Rising inflation and tighter budgets are reshaping the holiday shopping landscape, with consumers across all income brackets cutting back on discretionary spending. Lower personal savings rates have intensified the impact. According to Deloitte, personal savings have dipped to 3.4% in recent months, down from an average of 3.8% in June, leaving shoppers with less disposable income to spend during the holiday season.

“Rising credit card debt and the possibility that many consumers have exhausted their pandemic-era savings will likely weigh on sales growth this season compared to the previous one,” said Michael Jeschke, leader of Deloitte Consulting’s Retail & Consumer Products.

With these financial constraints, customers are expected to start hunting for bargains early, seeking deep discounts on essential categories such as groceries and home goods. This shift in behavior is driving retailers to push promotions and discounts earlier in the season to capture consumer interest before Black Friday.

E-Commerce Continues to Rise, In-Store Sales Slow

Despite the overall cautious outlook, e-commerce remains a bright spot for retailers. Deloitte expects online sales to grow between 7% and 9% this holiday season, totaling up to $294 billion, though this is a more modest increase compared to the 10.1% rise seen last year.

“Our forecast indicates that e-commerce sales will remain strong as consumers continue to take advantage of online deals to maximize their spending,” Jeschke added. As shoppers prioritize convenience and deals, online platforms are likely to capture a larger share of holiday spending.

Meanwhile, in-store sales are projected to grow by only 1.3% to 2.1%, reaching up to $1.3 trillion. This is a noticeable deceleration from last year’s 3.1% growth, as consumers become more selective about their purchases in brick-and-mortar stores.

A Shorter Shopping Season Adds Pressure

The 2024 holiday season will also be shorter than usual, with only 27 days between Thanksgiving and Christmas. This compressed timeline is pressuring retailers to intensify their promotional strategies earlier than in previous years. Retailers are already launching discounts in hopes of enticing shoppers before the last-minute rush.

As inflation continues to bite and personal finances remain stretched, the holiday season will be a balancing act for both consumers and retailers. Though sales will still grow, the pace is expected to be significantly slower, reflecting broader economic challenges.

(Adapted from Reuters,.com)

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