Bad holiday season? US retail growth may hit a new low since 2008!

According to Bain & Company, total U.S. retail sales for the 2023 holiday season will reach nearly $915 billion, up 3.0% year-on-year (not seasonally adjusted), with 90% of the growth coming from online sales and mail order. However, after deducting inflation, the actual growth rate of U.S. holiday season retail sales is nearly 1.0%, far below the 10-year average and the lowest actual sales growth since the 2008 financial crisis.

Bain stressed that retailers will continue to face severe challenges as shoppers spend more money on necessities due to the economic recession, with weak sales growth in November and December this year.

The study also found that the growth of US retail sales in 2023 will be relatively slow, increasing by 4.0% year-on-year. Bain pointed out that the growth momentum mainly comes from online sales and some offline categories. In the field of physical stores, essential categories such as health and personal care, daily necessities, food and beverages have seen strong growth, while the growth of other categories has slowed down in the past few months, and sales of some categories have declined.

According to Aaron Cheris, head of Bain & Company's Americas retail practice, retailers are overcoming the headwinds of rising interest rates due to increased debt. Nevertheless, some positive factors may also promote the growth of holiday retail. For example, people's increased spending power, wages, and disposable income have increased. In addition, retailers can also adopt new and targeted marketing methods, using technologies such as generative artificial intelligence and live streaming.

While online sales and mail-order demand have grown, in-store sales growth has slowed in recent months as inflation weighs on consumer confidence. Bain expects consumers to increase online spending this holiday season, including during the big sales event in October.

To overcome weak holiday sales, Bain recommends retailers take the following actions:

1. Launch offers early – shoppers buy early and may have less budget later.

2. Lead with deals and strategic promotions to attract customers who are “cautious” about spending.

3. Ability to empathize with customers and bring them holiday cheer during difficult times.

4. Apply artificial intelligence to personalize products and improve customer service.

5. Leverage stores to support profitable online growth – shipping, returns and allowing customers to try products.

6. Focus on unit sales and profits instead of blindly raising prices

Editor ✎ Nicole/

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