Holiday shopping may not be merry for retailers this year

Published On Nov 14, 2024, 6:00 AM

Retailers are expected to face a challenging holiday shopping season in 2024, with projected growth in holiday retail sales declining to 3% from 4.7% in 2023. This decline is attributed to cautious consumer spending amid economic pressures and tighter budgets. Retailers are likely to rely more heavily on discounts and advertising to attract shoppers, particularly during a shorter holiday shopping window. Big box retailers may fare better than department and apparel stores, which will need to use significant promotions to drive demand. Total holiday spending is expected to reach between $979.5 billion and $989 billion.

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Stock Forecasts

WMTView WMT chart on TradingView

Negative

Given the anticipated slowdown in holiday sales growth and the reliance on discounts by retailers, particularly in discretionary categories, companies heavily focused on consumer products may face difficulties. Conversely, large retail players with effective value communication are poised to perform better.

XLPView XLP chart on TradingView

Positive

Consumer staple retailers with a focus on value are likely to outperform during this challenging shopping season. This may benefit ETFs focused on consumer staples as consumers transition from discretionary spending to essential items.

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