The National Retail Federation has dramatically raised its forecast for 2021 retail sales to increase between 10.5 percent and 13.5 percent to more than $4.44 trillion, signaling confidence in the nation’s economic recovery and life continuing normalize after 18 months of the pandemic.
Back in February, the NRF predicted U.S. retail sales would grow 6.5 percent to 8.2 percent.
In its latest outlook, issued Wednesday, the NRF stuck to its original forecast that online sales are expected to grow between 18 and 23 percent this year, to a range of $1.09 trillion to $1.13 trillion. The announcement was made during NRF’s inaugural “State of Retail and the Consumer” event.
“The economy and consumer spending have proven to be much more resilient than initially forecasted,” said NRF president and chief executive officer Matthew Shay. “The combination of vaccine distribution, fiscal stimulus and private-sector ingenuity have put millions of Americans back to work. While there are downside risks related to worker shortages, an overheating economy, tax increases and over-regulation, overall households are healthier, and consumers are demonstrating their ability and willingness to spend. The pandemic was a reminder how essential small, mid-size and large retailers are to the everyday lives of Americans in communities nationwide.”
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Shay noted that NRF’s forecast was made when there was still great uncertainty about consumer spending, vaccine distribution, virus infection rates and additional fiscal stimulus, prior to passage of the American Rescue Plan Act.
Matthew Shay Jenna Bascom Photography
NRF’s numbers exclude automobile dealers, gasoline stations and restaurants and are based on the U.S. Census Bureau’s revisions and adjustments released on April 26.
The updated figure compares with $4.02 trillion in total retail sales in 2020. Of that, $920 billion was from purchases made through non-store and online channels.
In addition, NRF now projects full-year GDP growth to approach 7 percent, compared with the 4.4 percent and 5 percent forecast earlier this year. Pre-pandemic levels of output are expected to return this quarter.
“We are seeing clear signs of a strong and resilient economy,” NRF chief economist Jack Kleinhenz said. “Incoming data suggests that U.S. economic activity continues to expand rapidly, and we have seen impressive growth. Most indicators point toward an energetic expansion over the upcoming months and through the remainder of the year.”
Kleinhenz said the sheer amount of both fiscal and monetary policy intervention has lifted personal income and filled the well of income that was lost back in March and April of last year, creating an overabundance of purchasing power.
Kleinhenz sees the the U.S. economy this year growing the fastest since 1984.
In a panel during the event led by Shay, Albertsons Companies president and CEO Vivek Sankaran said that with consumers, “There’s clearly a move to quality of product, more fresh, better wines, better cuts of meat and to omnichannel shopping behavior, and things for the home, like flowers, some of that nesting behavior is still sticking with consumers.”
Jean-André Rougeot, president and CEO of Sephora Americas, said, “The big surprise for the start of the year was that our stores reopened and more traffic come back in, dot-com has stayed very strong and our stores have picked up dramatically,” though traffic is still below 2019. He cited a significant increase in conversion and basket size.
Rougeot also said the murder of George Floyd and the Black Lives Matter movement “really had an impact on the company and encouraged Sephora to be a better company,” involving creating a mix in leadership in stores and headquarters that reflects the diversity of consumers, and being committed to helping brands that are founded by people of color. Sephora’s commitment to diversity will encourage venture capital and private equity to also supports brands founded by people of color, he added.
Terry J. Lundgren, former Macy’s Inc. chairman and CEO, and founder and CEO of TJL Consulting Advisors, led a panel where Karen Benway, consumer market leader, east region, Ernst & Young, discussed findings of a survey of 5,000 consumers globally during May. “Consumers are still very focused on prioritizing key values,” and first on the list is affordability, and second is personal and family health. “[However,] that doesn’t discount key issues like environment and societal change,” she said. Retailers are still seeing pricing as being the key thing for consumers. Nevertheless, “many consumers are becoming more purpose driven,” Benway said.
Rachel Bonsignore, vice president of Gfk, said that among consumers there is a “strong increase in community and supporting local and small businesses, as people move further away from self interests,” and are in tune to inequality and social intolerance. “That’s much more imperative for brands to address,” Bonsignore said.
“There is a lot of fragmentation [within] the consumer population, a lot of complexity about what people want from brands, but open-mindedness has gone down in the last couple of years. This highlights a need for a more nuanced approach to things. There is a lot of disagreements on how brands need to play a role on social issues, there is lot of tricky waters for brands to navigate now.”
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