Will retail achieve double-digit sales growth this year?
It’s amazing what a difference a year can make. The U.S. retail sales appear poised to climb to record-setting highs as more Americans get vaccinated against COVID-19, public health restrictions are lifted, jobs rebound in a tight labor market and stimulus checks and breaks in the form of child tax credits all combine to drive consumer purchasing.
The National Retail Federation (NRF) certainly sees big things ahead. The trade group has revised its 2021 forecast from earlier in the year from annual growth of around 6.5 percent (excluding autos, gas and restaurants) to between 10.5 percent and 13.5 percent. That would make 2021 the fastest growing year on record since 1984. NRF is looking to non-store and online sales to be a big driver of retail’s fortunes with dollar revenues climbing between 18 and 23 percent in those areas.
Retailers may be tempted to wear shades with their immediate futures looking so bright, but there are signs of potential storms, as well.
Supply and demand, in the form of labor and goods, poses a particular challenge for retailers. Retailers large and small are competing in an extremely tight labor market with large companies, in particular, offering bonuses, higher wages and other perks to attract recruits.
Product supplies are also a significant challenge as manufacturers ramp up to meet post-pandemic demand.
A “Global Port Tracker” report released earlier this week by NRF and Hackett Associates points to container points having their “busiest April on record” with May appearing to be on track for new all-time highs, as well.
“There’s no shortage of demand from consumers, but there continue to be shortages of labor, equipment and shipping capacity to meet that demand,” said Jonathan Gold, NRF vice president for supply chain and customs policy. “Supply chain disruptions, port congestion and rising shipping costs could continue to be challenges through the end of the year.”
Inflation also remains a potential concern for retailers, but NRF sides with the Federal Reserve Bank that prices will moderate as supply shortages are addressed in the coming months.
- Retail Sales to Now Exceed $4.44 Trillion in 2021, as NRF Revises Annual Forecast – National Retail Federation
- Retail Cargo Continues Setting Records as Supply Chains Struggle to Keep Up with Consumer Demand – National Retail Federation
DISCUSSION QUESTIONS: Do you expect retail sales growth to climb into the double digits this year? Where do you see the biggest opportunities for improvement, and do see market factors that could change the equation once again?