Forecasters Say We're Going to Spend More Money This Holiday Season

Good news for retailers.
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Dhani Mau
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Good news for retailers.
Photo: Adam Berry/Getty Images

Photo: Adam Berry/Getty Images

Remember how there were a ton of crazy discounts and sales towards the end of the holiday shopping season last year? That's because there was a holiday shopping lull -- for brick-and-mortar stores at least -- and those retailers were desperate and afraid.

Okay, that was a bit melodramatic, but things are looking up for 2014. A new, very optimistic forecast by the National Retail Federation predicts that holiday sales will increase 4.1 percent this year to $616.9 billion. This isn't an absurd increase -- last year saw an overall increase of 3.1 percent, which matched the growth rate from the previous couple of years -- but it's a healthy number and it marks the first time since 2011 that sales will have increased more than four percent.

However, retailers can’t rest entirely easy: While forecasters believe that consumers have more spending power this year, they are still going to be discerning. NRF Chief Economist Jack Kleinhenz explains: “In the grand scheme of things, consumers are in a much better place than they were this time last year, and the extra spending power could very well translate into solid holiday sales growth for retailers; however, shoppers will still be deliberate with their purchases, while hunting for hard-to-pass-up bargains.”

But where will they spend that money? Each season, shoppers are spending more of their dollars online than in physical stores. A forecast by Shop.org, also released on Tuesday, estimates that online holiday sales will grow between 8 and 11 percent.

So while sales may increase overall this holiday season, we may not see a dramatic increase in store traffic. It will be interesting to see if and how retailers prepare for that.