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Bain & Company’s holiday forecast predicts 3% growth in retail sales this year, which is well below the 10-year average of 5.2% and down from last year’s 4.2%, but the recent Federal Reserve rate cut could give consumers a boost in the coming months.
The report anticipates a sizable gap between online and in-store sales, predicting a nearly flat rate of 0.5% year over year growth for in-store sales—the lowest since the Great Recession—compared to a 9.5% increase for non-store sales.
On a category basis, the forecast also predicts a wide range. On the higher end, grocery, clothing and accessories, and general merchandise could grow in the range of 1%–5%, while furniture and home furnishings could see a more than 5% decline.
- In the middle are electronics and appliances and home and health and personal care coming in flat, per the report, and department, building and garden, and sporting goods, hobby, book, and music declining 1%–5%.
While retail sales were higher than expected in August, rising 2.1% YoY, Aaron Cheris, partner in Bain & Company’s Retail practice, said in a statement that this was “mostly due to expectations being so low.” The monthly data also found that nonstore sales stood out, rising 7.8% from the year before.
Staying optimistic: “It’s been a relatively slow year for US retail, as consumers have grappled with rising costs and growing unemployment,”" Cheris said. “Nonetheless, interest rate cuts and a strong stock market performance could help to bolster consumer confidence, potentially contributing to at least modest sales growth.”
The first part of that scenario at least isn’t quite speculative anymore: The Federal Open Market Committee on Wednesday announced its first rate cut since the pandemic, cutting the benchmark rate by half a percentage point.