US holiday retail sales to grow 4% this year: Bain & Company

Bain’s survey of US consumers shows, when compared to last year, consumers expect to do more in-store shopping. Bain estimates in-store sales will grow 2.75 per cent, contributing 2 per cent of overall growth, with the strongest gains in clothing and accessories, general merchandise (excluding department stores), and health and personal care, which are poised to grow 5 per cent or more. In contrast, sales experienced by other sectors such as electronics and appliances, building and garden, and furniture stores are expected to decline, Bain found. 

Bain’s proprietary Consumer Health Index shows that US households across income groups reported a worsening fiscal outlook in August. Among upper-income households — those who account for 54 per cent of consumer spending — both outlook and intent to spend remain elevated compared with last year, though recent data shows they are slowing.

Financial strain is evident. Severe credit delinquencies (90 or more days overdue) have risen about 3 per cent year-over-year, reaching their highest level since 2011, particularly among borrowers under age 30. Savings rates remain low, and labour force participation fell 0.4 percentage points in August compared with a year earlier, marking the fourth consecutive monthly decline and reversing the upward trend seen since the pandemic.

Despite these pressures, several factors could help support nominal sales growth. Average hourly wages grew 3.7 per cent year-over-year in August, outpacing inflation growth and consumer price index (CPI) which grew just 3.1 per cent, giving many consumers more confidence and spending power. The S&P 500, a benchmark US stock index, is up 21 per cent compared with 2024, likely boosting wealth perceptions among higher-income households. The potential for interest rate cuts could also bolster consumer sentiment heading into the holidays. 

“This holiday season will be a mixed one for US retailers,” said Aaron Cheris, partner in Bain’s Retail practice. “Consumers are cautious and facing financial pressure, but they are also feeling the lift from higher wages and a strong stock market. Leading retailers will strike the right balance — leaning into value, creating warm human experiences while implementing new technologies, and capitalising on big events like Black Friday to capture share from competitors.”

ALCHEMPro News Desk (RR)