Creating Resilience

Despite Challenges, Retailers Poised for Strong Holiday Season

November 10, 2021 6 Minute Read

Labor shortages and supply chain disruption are just two of several obstacles to this year’s holiday shopping season. How will consumers, retailers and landlords overcome them?

Holiday retail sales in November and December are expected to rise significantly from last year’s COVID-constrained levels. Various sources1 forecast total holiday sales to increase between 7% and 10.5% this year. Based on U.S. Census Bureau data and the range of estimates, CBRE anticipates an increase of 8.4% from last year to more than $800 billion. Brick-and-mortar retail sales, which were essentially flat last year due to COVID concerns, are expected to rise by 8%, a 10-year high, as shoppers return to stores. E-commerce will make up approximately 20% of total holiday sales and should see growth of between 10% and 15% from last year, according to various industry estimates.

FIGURE 1: Historical & Forecast U.S. Holiday Sales, $ Billions

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Holiday retail sales figures are comprised of U.S. retail sales in November and December, excluding auto, gas and restaurants.
Source: Deloitte, KPMG, Mastercard, National Retail Federation, CBRE Research, Q3 2021.

Holiday shoppers have less debt, more money to spend

Despite rising inflation and eroding consumer confidence, approximately 90% of recently surveyed consumers expect to participate in the 2021 holiday shopping season, according to the National Retail Federation (NRF).

Optimistic holiday sales projections this year are based largely on a robust level of consumers’ disposable income. Debt per household has greatly diminished over the past 18 months, hitting an all-time low in Q1 2021.

FIGURE 2: Household Debt Service as % of Disposable Income

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Source: St. Louis FRED, Q3 2021.

NRF predicts that the average consumer will spend $998 this holiday season, the same as in 2020 and about 5% less than the $1,048 per-person spend in 2019. Gift card sales should be particularly strong in the face of continued supply chain disruptions that could lead to a rapid depletion of retail inventories.

FIGURE 3: Gifts Consumers Hope to Receive, by % of Respondents

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Source: National Retail Federation, Q3 2021.

Retailers face challenges this season

Labor shortages and supply chain disruptions could impede retailers’ ability to fully cash in on the holiday sales season. As a result, retailers are addressing the following issues:


The retail industry remains understaffed, with more than 1.2 million job openings as of August, according to the U.S. Bureau of Labor Statistics. Retail job openings and quits hit a 20-year high in Q2.

Retailers could hire between 500,000 and 665,000 workers this holiday season, up from 486,000 last year, according to NRF. Several retailers are offering signing bonuses and higher wages to attract seasonal workers.


According to a recent study by data analytics provider First Insight and the Wharton School, 98% of retail executives expect supply chain disruptions to negatively affect the holiday shopping season.

More than half of those surveyed plan to pass higher supply chain costs on to consumers, while approximately one-third will absorb cost increases and accept lower profit margins.


Retailers’ inventory-to-sales ratios plummeted to an average of 1.08 in Q2 before ticking up slightly to 1.10 in August, compared with a pre-COVID average of 1.47, according to the most recent data by the Federal Reserve Bank of St. Louis.

Retailers have been building inventory in advance of the season but are finding it increasingly difficult to secure more warehouse space. In addition, larger retailers have been hiring private cargo ships to bypass congested ports.


In response to rising concerns about inventory availability during the traditional November-to-December season, many retailers have been encouraging consumers to shop earlier, promoting September as “the new December.” Nearly half of the consumers recently surveyed by NRF intended to start their holiday shopping before November, a 10-year high.

Malls and open-air centers should see increased foot traffic

Eighteen months after the onset of COVID-19, retail landlords are reporting significant recovery in foot traffic. Data analytics provider reports that foot traffic has increased by 0.7% in malls and by 2% in open-air centers from 2019 levels.

A survey by NRF asked potential holiday shoppers where they plan to make their purchases. Key findings include:

  • Department stores should see a slight increase in shoppers after a sizable drop last year.
  • Electronics stores will continue to lose foot traffic as more consumers make online purchases.
  • Local/small businesses will benefit from a third consecutive year of more shoppers.
  • Outlet centers also will have more shoppers.

FIGURE 4: Store Types Where Consumers Expect to Make Holiday Purchases

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Source: National Retail Federation, October 2021.

What will the 2021 holiday season mean for retail?

Despite disruption from the COVID-19 pandemic, the retail real estate sector is well on the road to recovery. The retail availability rate is nearing a long-term low after four consecutive quarters of positive net absorption. Q3 2021 had the third-highest quarterly absorption total in more than a decade as leasing activity increased, particularly for open-air centers. A recent CBRE study found higher levels of per-square-foot productivity by brick-and-mortar retailers that incorporated online sales fulfillment services. This has led to steady retail rent growth that is expected to continue in years ahead.

Despite potential challenges, the 2021 holiday season should generate record sales volume and go a long way toward improving retail real estate fundamentals.

1 Deloitte, KPMG, Mastercard, National Retail Federation.