Holiday sales growth in the US will drop to roughly 3 per cent in 2024 from 4.7 per cent the previous year, according to S&P Global Ratings, which is still less than the 5.3 per cent 10-year average. The firm’s growth outlook is reported to be supported by price actions and modest volume gains, given its assumption of a cautious but resilient middle-class to upper-class customer.
S&P said it expects retailers to rely on sales to boost holiday cheer because it expects the holiday season to be softer than in previous years.
Due to the increasing foot traffic from value-conscious customers, the company anticipates that value merchants (like TJX Cos. Inc.) who serve the more resilient middle-class and upper-class consumer would do better.
Big Box stores like Walmart Inc. and Target Corp. will probably do well as customers look for ways to stretch their budgets because of their capacity to communicate clearly and provide value to customers. The business anticipates that other industries, like department stores and clothing merchants, would depend on larger discounts to boost sales and control inventories.
The September retail sales data, which S&P cited, was an early predictor of Christmas buying patterns and indicates that if merchants concentrate on enhancing their value offerings, the 2024 holiday season might be prosperous.
Retailers’ profit margins will be further squeezed this holiday season as a result of a more price-conscious consumer who will drive promotions and discounts. According to the survey, numerous businesses announced official cost-saving initiatives throughout the last year in an attempt to counteract the highly promotional retail climate.
According to the organisation, in order to maintain margins, retailer have also taken a cautious approach to inventory management.
