NRF Releases 2021 Forecast, Sales to Exceed $4.3 Trillion

March 2, 2021  by Laurie Northington in Business Strategy, Industry   

“Despite the continuing health and economic challenges COVID-19 presents, we are very optimistic that healthy consumer fundamentals, pent-up demand and widespread distribution of the vaccine will generate increased economic growth, retail sales and consumer spending,” said Matthew Shay, president and CEO. “From the outset of the pandemic, retailers have gone above and beyond even the most conservative safety guidelines to protect and serve their associates and consumers alike. Retailers are increasingly engaged in working with federal, state and local health officials to distribute and administer the vaccine. This partnership has been key to our economic health throughout the pandemic and will continue this year.”

Early results show that retail sales in 2020 grew 6.7% over 2019 to $4.06 trillion, nearly doubling NRF’s forecast of at least 3.5% growth, which did not account for the impact of a global pandemic. This figure compares with 3.9% growth in 2019. Online and other non-store sales, which are included in the total figure, skyrocketed to 21.9% at $969.4 billion as consumers shifted to ecommerce. The numbers exclude automobile dealers, gasoline stations and restaurants.

The 2020 November-December holiday season accounted for nearly one-fifth (19.4%) of overall annual retail sales. Retail sales during this period grew an unexpectedly high 8% to $787.1 billion. Non-store and other online sales represented $206.9 billion of total holiday sales, up 22.6% over the year before.

NRF forecasts that 2021 retail sales are estimated to total between $4.33 trillion and $4.4 trillion. Online sales, which are included in the total, are expected to grow between 18% and 23% to between $1.14 trillion and $1.19 trillion.

NRF expects the overall economy to gain between 220,000 and 300,000 jobs per month in 2021, depending on the pace of the overall economy in the second and third quarters. Despite the economy’s stalled momentum at the end of last year, NRF forecasts real GDP growth between 4.5% and 5.0%.   

“The trajectory of the economy is predicated on the effectiveness of the vaccine and its distribution,” said Jack Kleinhenz, chief economist, NRF. “Our principal assumption is that that the vaccination will be effective and permits accelerated growth during the mid-year. The economy is expected to see its fastest growth in over two decades.”
   
Kleinhenz noted that this year marks the second year of savings, record high stock valuations, increased home prices, enhanced government support and record low interest rates, which are all contributing factors towards the economy and consumer spending behavior.  

Additionally, Kleinhenz said households will still consume retail goods but will turn to services as they are able, which normally account for 70% of consumer spending. While the pandemic has precipitated broader adoption of multichannel services for the retail industry, households are becoming attached to the convenience and product selection of buying online.   

As the available data and factors surrounding the economy are subject to change due to several extenuating circumstances, NRF will update its estimates accordingly.