NRF Projects Retail Sales to Grow Between 6.5% and 8.2% in 2021

Retail sales are expected to grow between 6.5% and 8.2% or $4.3 trillion and $4.4 trillion this year, the National Retail Federation projected Wednesday, citing the reopening of the economy and vaccination efforts as propelling what could prove to be the fastest growth since 2004. Online or non-store sales in particular are expected to jump between 18% and 23% or $1 trillion to $1.2 trillion, the trade group said. The bullish forecast is on top of the 6.7% growth the retail sector experienced in 2020 to $4.06 trillion, well above the 3.9% increase in 2019, though certain segments such as home improvement, ecommerce and essential goods benefitted more than others, namely apparel makers. Meanwhile, non-store sales soared 21.9% to almost $970 billion last year, the NRF said, noting that the numbers exclude automotive dealers, gasoline stations and restaurants. “Despite the challenges we’ve all faced … and there’s been far too many personal tragedies … we continue to be optimistic in the aggregate,” said NRF's CEO Matthew Shay during a conference call discussing the forecast. "We’re optimistic the economy will experience its fastest growth in over two decades," he said. “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,” Shay said in a separate statement. Undergirding the NRF's outlook is the second year of savings by consumers (who paid down debt) combined with high valuations of both stocks and homes, government support and record low interest rates, said the trade association's chief economist Jack Kleinhenz, pointing out that these are factors shaping the economy and consumer behavior. As to the trajectory, economic growth is likely to pick up by mid-year with a surge in consumer spending during the second half of 2021, he said. "The consumer has purchasing power and is willing to spend," Kleinhenz said. The NRF also said it expects the economy to gain on average between 220,000 and 300,000 jobs per month and GDP growth of between 4.5% and 5%. There are risks, though, to the forecast, including virus mutations that could prevent a return to some state of normalcy. Though vaccine distribution remains the most important topic on the minds of retail executives, Shay said, other issues the NRF plans to work on in 2021 with both the Biden administration and Congress include bipartisan support for an infrastructure bill regarding improvement of roads, bridges and ports, as well a comprehensive solution to immigration issues left unaddressed and education programs to ensure people have the proper skills as the economy continues to evolve.