The NRF foresees the fastest retail growth this year since 2004.
By Alan Wolf, YSN
The world’s largest retail trade association has painted a rosy picture for retail sales this year.
According to the National Retail Federation (NRF), the containment of COVID, pent-up consumer demand, and a solid economic backdrop should fuel retail sales growth of between 6.5 percent and 8.2 percent, to more than $4.3 trillion in 2021.
The forecast represents the highest level of growth since 2004, when retail sales grew 6.3 percent, the trade group said.
What’s more, consumers, who embraced e-commerce during the pandemic, will remain hooked on the convenience and wide selection of online shopping, the NRF predicted, which will send online sales soaring upwards of 23 percent this year, to nearly $1.2 trillion.
The projection dovetails with last week’s pronouncements by Best Buy, which is re-engineering its store-based business model around digital selling.
NRF chief economist Jack Kleinhenz based his 2021 retail outlook on widespread COVID vaccinations and expectations for the fastest economic growth in over two decades. Setting the stage for the expansion are two straight years of savings, record high stock valuations, increased home prices, enhanced government support and record low interest rates, he said.
As NRF president/CEO Matthew Shay added, “We are very optimistic that healthy consumer fundamentals, pent-up demand and widespread distribution of the vaccine will generate increased economic growth, retail sales and consumer spending.”
That echoes recent observations by Whirlpool CEO Marc Bitzer, who said consumer spending on the home will not abate even after the pandemic does.
But not everyone is as confident in consumers’ continued willingness to spend. Last week The Home Depot refused to forecast its performance this year, citing “significant uncertainty” over whether or not shoppers will tighten their purse strings.
And Best Buy CFO Matt Bilunas was even more pessimistic, projecting a possible 2-percent decline in sales this year as quarantines lift and consumers shift their spending to travel and dining out.
The NRF acknowledged that shoppers can also expect to see price increases due to continued supply constraints, which have been exacerbated by aging U.S. ports that have kept some container ships idled for weeks.