US holiday sales growth will slow down! Which categories have the opportunity to break through?

According to the 21st annual holiday forecast from Customer Growth Partners (CGP), U.S. holiday season retail sales will increase 5.8% to $912 billion from $862 billion last year. Compared with the record growth in 2021, Americans' spending fell sharply during this year's holiday season.

After more than a year of steady growth, U.S. consumer spending is slowing to near the mid-normal range, said Craig Johnson, head of CGP. But the slowdown represents "a healthy normalization of retail spending as consumers rebalance spending on services and goods."

Craig Johnson pointed out that the sharp deceleration in US retail growth is due to rampant inflation in most industries, especially food, gasoline and household utilities, which are necessities that squeeze out spending on non-essential items. For low-income families, it is difficult for them to withstand the impact of inflation during this holiday season.

Despite a cooling U.S. housing market, home improvement retailers such as Home Depot and Lowe's are expected to outperform other industries this holiday season, up 9.5% from last year as consumers focus more on spending on home essentials, according to CGP's forecast.

The grocery category will see an 8.9% increase, thanks to strong sales of used goods, pet supplies, office supplies and gifts; food and beverage sales will increase 8.2%, mainly due to price increases; the consumer electronics and appliances category continues to face challenges due to a reduced focus on non-essential items, with holiday sales expected to fall 6.2%.

CGP also predicts that the U.S. online DTC market will grow 7.4% year-on-year, a significant slowdown from the double-digit growth in the past. In addition, U.S. convenience store sales will grow 4.7% year-on-year, and supermarket sales will grow 4.6% year-on-year.

It is understood that since the consumer economy accounts for more than 68% of the overall US GDP and the retail industry is the largest part of consumer spending, the US retail industry will not boost the broader economic outlook as it has in the past few years. This means that the US economy will weaken.

Craig Johnson further stated that although the growth of the US retail industry is slowing, spending during this year's holiday season will still set a new record of more than $900 billion. If US inflation can be alleviated this year and job growth continues, the retail industry is likely to return to a healthy growth range of 5% to 6% in 2023.

Editor ✎ Nicole/

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