Can investors be optimistic about holiday retail sales?

Patrick Diedrickson, CFA, Director – Ameriprise Investment Research Group

A stack of packages sit on a doorstep


Key Points

  • We believe retail industry sales could exceed consensus forecasts for the 2020 holiday season.
  • Merchants offering home entertainment and outdoor goods are positioned well.
  • The e-commerce trend will continue to accelerate as shoppers avoid crowds during the pandemic.

Retail industry sales could exceed consensus forecasts for the 2020 holiday season, in our view. This factors in accelerated e-commerce sales and is based on several key indicators that we believe were underestimated in the consensus forecasts:

  • Consumer confidence is rising.
  • Labor markets are improving.
  • Household balance sheets have remained solid.
  • Actual retail sales have improved materially since May.1
  • Consumers are shopping online more to avoid crowds.

That said, unexpected developments could cause a sales setback. This year’s potential risks include a rise in COVID-19 infection rates, weaker economic conditions and challenging weather.


Retail forecasts by the numbers

Deloitte2 forecasts 1.0% to 1.5% retail industry sales growth year over year for the November to January period. That is a decline from 2019 sales growth of 4.1%. However, e-commerce sales are projected to grow 25% to 35% during the same period, up from 14.7% growth in 2019.

Consumer intentions contribute to the overall retail forecasts. According to a separate survey from Accenture,3 U.S. households plan to:

  • Spend an average of $540 on holiday gifts, down from $637 last year.
  • Minimize in-store holiday shopping (61%) to avoid COVID-19 risks.
  • Prepare smaller holiday gatherings and reign in overall spending.


Extended season, promotions drive sales

Compared to last year, retailers have two more holiday shopping days to attract shoppers — 28 days total between Thanksgiving and Christmas.

Additionally, holiday marketing promotions have begun earlier this year. For example, in October:

  • Many retailers began stocking their shelves with holiday gifts and décor, several weeks earlier than last year.
  • Amazon, Target, Walmart and other major retailers offered significant promotions on holiday merchandise, such as gifts and decorations.

We believe consumers are price-sensitive in the current environment. This may be due to challenging, uncertain economic and pandemic conditions. Retailers who can profitably serve budget-conscious consumers can outperform investor expectations this holiday season, in our view.   


Retail sector opportunities

Several clear winners for the 2020 holiday season are businesses positioned for:

  • The stay-at-home theme, such as consumer electronics and video games.
  • E-commerce retail sales.
  • Outdoor leisure products, such as camping, hiking and boating. We believe this segment may also experience longer-term revenue tailwinds beyond the pandemic.

Potential investment laggards include restaurants and hotels. These businesses may experience a year-over-year decline in holiday group events as households plan for smaller gatherings this season.

In summary, holiday retail sales are likely to experience growth this year — but at a lower rate compared to 2019 on a year-over-year basis. If you have holdings in the Consumer Discretionary and Consumer Staples sectors, you could consider scheduling a portfolio review with your financial advisor. The personalized advice they offer will help ensure investment selections remain appropriate for your financial goals, risk tolerance and time horizon.



1 FactSet Redbook Index Year-Over-Year retail industry sales growth as of Oct. 22, 2020.

2 Deloitte news release, “A Tale of Two Holiday Seasons: As a K-Shaped Recovery Model Emerges, Consumer Spending Heavily Bifurcated.” Sept. 15, 2020.

3 Accenture survey, “A Shopping Season Like No Other.” Published Sept. 30, 2020, on and featured on CNBC Oct. 1, 2020.