Retail sales expected to reach $5.23 trillion in 2023
- Consumer spending is expected to reach as much as $5.23 trillion this year.
- The NRF predicts spending will increase by between 4% and 6%, this year compared to spending last year.
- That’s slower than the last two years, but still more growth than before the pandemic.
Consumer spending is expected to reach as much as $5.23 trillion this year, according to new projects from the National Retail Federation (NRF).
The NRF on March 29 said it expected consumer spending to increase by between 4% and 6% this year compared to spending last year. In total, spending is expected to reach between $5.13 trillion and $5.23 trillion, according to the NRF. The projections were shared at the NRF’s virtual “State of Retail and the Consumer” event.
Growth this year is anticipated to slow compared to the gain in consumer spending seen last year. Consumer spending grew 7% last year to $4.9 trillion. As the NRF reports, growth in spending is still higher than the pre-pandemic growth average of 3.6%. Consumer spending jumped during the COVID-19 pandemic, increasing 7.6% in 2020 compared to 3.5% in 2019. Consumer spending rose even more — by 14.4% — in 2021, according to NRF data.
Non-store and online sales growth is expected to jump higher, by about 10% and 12% to as much as $1.42 trillion, according to the NRF. But as it noted, much of those gains are multichannel, meaning the retailer’s physical store still plays a role in the fulfillment process.
Retailers across sectors have revamped their e-commerce strategies following shifts in consumer behavior driven by the pandemic. Retailers from Target to Macy’s and others in essential categories, such as drug stores, grocers and convenience stores, have allocated in-store space to digital order fulfillment, focused on their pick-and-pack and delivery offerings and also used third-party partners, such as DoorDash and Instacart.
“In just the last three years, the retail industry has experienced growth that would normally take almost a decade by pre-pandemic standards,” said Matthew Shay, NRF’s president and CEO, in a release. “While we expect growth to moderate in the year ahead, it will remain positive as retail sales stabilize to more historical levels. Retailers are prepared to serve consumers in the current economic environment by offering a range of products at affordable prices with great shopping experiences.”
The NRF this week noted that inflation has decreased, but is still expected to remain between 3% and 3.5% for all goods and services. It also expects that the unemployment rate will pass 4% by the end of this year.
As Retail Leader Pro recently reported, while the U.S. is not technically in a recession, consumers are feeling the impact of economic hurdles, like inflation and higher interest rates. Shoppers are changing behaviors, reducing their spending in categories such as restaurants and entertainment. Retailers that focus on value, sales and promotions — and communicate that value to customers — are likely to win this year, said Elizabeth Lafontaine, chief analyst for Retail Leader Pro.
“Clear value messaging is the way forward for the retail industry in the short term as consumers continue to focus on making trade-offs and protecting their discretionary income,” she said. “Even retailers that cater to higher-income consumers need to ensure that value for price is communicated to mitigate pullback.”