November 13, 2023



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2023 Holiday sales are expected to to achieve a 4% growth, reflecting a "completely new set of dynamics"

In the past few years, the holiday shopping season has been marked by unparalleled uniqueness for both consumers and businesses.

Despite the challenges of COVID-19 in 2020, retail sales in November and December saw a remarkable year-over-year surge of 9.1%, driven by Americans turning to online shopping from the comfort of their homes.

The holiday shopping season of 2021 witnessed a historic growth of 12.7%, followed by a 5.4% increase in 2022. This shift reflects the impact of inflation and the depletion of household savings, with people transitioning from online to in-store consumption. The travel, hotel, and restaurant industries are gradually recovering.

This year introduces a range of new dynamics. Despite persistent challenges such as high inflation, stringent credit conditions, and rising interest rates, the financial conditions of ordinary households remain relatively robust.

Recent government data indicates that consumers haven't tapped into the substantial savings accumulated during the pandemic as much as previously thought. Household savings continue to be a significant driving force behind out-of-home consumption.

The National Retail Federation (NRF) anticipates retail sales during the holiday season (defined as November 1 to December 31) to grow by 3% to 4% compared to 2022, reaching between $9.573 trillion and $9.666 trillion.

A recent report from The New York Times highlights surging consumer spending, contributing to a remarkable economic growth in the third quarter of 2023. Citing the Commerce Department's October report, the article reveals a robust 4.9% annualized growth rate in the Gross Domestic Product (GDP) from July to September, surpassing market expectations and marking the strongest growth since late 2021. Increased consumer spending remains a key driver behind this positive economic trend.

Holiday consumer spending propels the flourishing retail industry, which, in turn, fuels growth in the restaurant service sector.

Healthy food brand Sweetgreen experienced a significant 24% increase in total revenue in the third quarter, projecting total revenue for 2023 to be between $5.75 billion and $5.85 billion, with same-store sales at 3-5%, store profits at 16.5% - 17.5%, and the opening of 35 new stores.

Fast-food giant McDonald's also reported its third-quarter performance, revealing revenues of $66.92 billion, a 14% year-over-year increase; and a net profit of $23.17 billion, up 17% from the previous year. In addition to revenue and net profit growth, McDonald's global same-store sales achieved an 8.8% increase, with almost all segmented markets experiencing over 8% growth.

Economists state, "While economic trends remain highly uncertain, the economy continues to advance, defying recession predictions and demonstrating more resilience than expected."

It is expected that the recent momentum in consumer spending will persist into the holiday season, although the growth rate will slow down. The simple reason behind this phenomenon is that, as interest rates rise, fixed monthly household expenses remain constant, prompting individuals to maintain their lifestyle within the constraints of their limited income.

Economists suggest a "disconnect between robust consumer spending and weak consumer confidence." Despite concerns about inflation, high-interest rates, and political pressures, consumers are expected to increase their spending.

Despite spending imbalances, the consumer industry remains "highly elastic" this year, with a "swift" growth rate in the first quarter, a slowdown in the second quarter, a "quite robust" third quarter, and an anticipated slowdown again in the fourth quarter.