National Retail Federation Says Retail Sales Will Rocket in 2021
The National Retail Federation (NRF) expects retail sales to skyrocket to a high not seen in 17 years — the association announced Feb. 24 that it anticipates retail sales will grow between 6.5% and 8% to more than $4.33 trillion in 2021 as more individuals get vaccinated and the economy reopens. Online sales, which are included in the total, are expected to grow between 18% and 23% to between $1.14 trillion and $1.19 trillion.
If the NRF’s annual forecast is correct, it will be the highest sales growth since 2004, NRF President and CEO Matthew Shay said during a conference call. “It would be an extraordinary outcome, and we’re confident it can be achieved,” he added.
Despite the continuing health and economic challenges COVID-19 presents, Shay said NRF is optimistic that healthy consumer fundamentals, pent-up demand and widespread distribution of the vaccine will generate increased economic growth, retail sales and consumer spending. Shay also lauded retailers for going above and beyond even the most conservative safety guidelines to protect and serve their associates and consumers alike from the outset of the pandemic.
“Retailers are increasingly engaged in working with federal, state and local health officials to distribute and administer the vaccine,” he added. “This partnership has been key to our economic health throughout the pandemic and will continue this year.”
Early results show that retail sales in 2020 grew 6.7% over 2019 to $4.06 trillion, nearly doubling NRF’s forecast of at least 3.5% growth, which did not account for the impact of a global pandemic. This figure compares with 3.9% growth in 2019. Online and other non-store sales, which are included in the total figure, soared to 21.9% at $969.4 billion as consumers shifted to e-commerce. The numbers exclude automobile dealers, gasoline stations and restaurants.
NRF said the 2020 November-December holiday season accounted for nearly one-fifth (19.4%) of overall annual retail sales. Retail sales during this period grew an unexpectedly high 8% to $787.1 billion, according to the association, with non-store and other online sales representing $206.9 billion of total holiday sales, up 22.6% over the year before.
“The retail industry continues to power our economy,” Shay said. “That was really the story of 2020 in many ways.”
NRF expects the overall economy to gain between 220,000 and 300,000 jobs per month in 2021, depending on the pace of the overall economy in the second and third quarters. Despite the economy’s stalled momentum at the end of last year, NRF forecasts real gross domestic product growth between 4.5% and 5%.
“The trajectory of the economy is predicated on the effectiveness of the vaccine and its distribution,” NRF Chief Economist Jack Kleinhenz said. “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 over two decades.”
Kleinhenz noted that this year marks the second year of savings, record-high stock valuations, increased home prices, enhanced government support and record low interest rates, which are all contributing factors towards the economy and consumer spending behavior.