Creating Resilience

Slight Increase in Holiday Retail Sales Expected This Year

November 7, 2023 3 Minute Read


Holiday retail sales growth is expected to moderate this year as persistent inflation, lower savings rates, rising credit-card debt and higher interest rates begin to take their toll on consumer confidence. Year-over-year retail sales in the Q4 holiday period are expected to increase by just 3% this year compared with the 7.5% jump in 2022 and 14.6% surge in 2021.

Considering this expected slowdown, retailers have taken steps to improve operational efficiencies, including better inventory control and more frugal reverse logistics procedures.

Figure 1: Q4 2023 Retail Sales Forecast

Note: Retail sales exclude motor vehicles & parts and gasoline stations.
Source: CBRE Research, Q3 2023.

Consumer Trends

The U.S. consumer enters this holiday season with certain strengths and weaknesses, leading to increased economic uncertainty. Wage growth has exceeded inflation for most of this year and the 3.8% unemployment rate as of September is well below the long-term average of 5.7%. However, the personal savings rate fell to 3.9% in August, less than half of the long-term average of 8.8%.

Figure 2: Consumer Price Index vs. Wage Growth

Source: St. Louis Federal Reserve Bank, Q3 2023.

Although total credit card debt reached $1.03 trillion at midyear 2023, up by 14% from a year ago, the average debt service payment as a percentage of disposable income remained significantly below historical averages.

Figure 3: Household Debt Service Payments as a Percent of Disposable Personal Income

Source: St. Louis Federal Reserve Bank, Q3 2023.

Other consumer spending challenges include increased housing costs and the resumption of student loan payments. Student debt totaled $1.57 trillion or 9% of total consumer debt as of Q2 2023. Debt service on student loans could total $10.4 billion per month or $31.3 billion per quarter, assuming a 20-year payment period and the 20-year average interest rate of 5.09%. This could limit spending power by around 2% of the projected $1.5 trillion in total consumer spending for Q4 2023, which would materially impact the retail industry.

Figure 4: Student Loan vs. Credit Card Debt

Source: New York Federal Reserve, August 2023.

Read what's happening in Retail and beyond

Subscribe to Our Take newsletter and receive expert perspectives on what matters most in commercial real estate.

Subscribe now

Retail Real Estate Fundamentals Remain Strong

Net absorption increased quarter-over-quarter in Q3, lowering the overall availability rate to just 4.8%—its lowest level since CBRE began tracking the market in 2005. Pop-up shops that historically proliferate during the holiday shopping season have found it more difficult to secure space this year, especially in the strongest markets and trade areas.

Figure 5: Top Ten Markets for Least Availability by Retail Format

Note: The Bay Area includes San Francisco, Oakland and San Jose. New York City includes Manhattan, the Bronx, Brooklyn, Queens and Staten Island. North Florida includes Jacksonville, Orlando and Tampa. South Florida includes Miami, Fort Lauderdale and West Palm Beach.
Source: CBRE Econometric Advisors, Q3 2023.

Figure 6: Top Ten Markets for Retail Sales Growth Forecast, Q4 2023 vs. Q4 2022

Note: The Bay Area includes San Francisco, Oakland and San Jose. North Florida includes Jacksonville, Orlando and Tampa.
Source: Oxford Economics, Q3 2023.

Stockpiled Inventory Lessens Need for Pre-Holiday Import Surge

Less container volume at major U.S. ports this year than last reflects lower demand for foreign-made products. Since the pandemic, U.S. retailers have significantly increased their warehouse space to stockpile more inventory and avoid any potential supply chain disruptions. More on-shoring of manufacturing operations also has led to less need for imported goods.

Figure 7: Jan-Sept 2023 Port Container Volume Comparisons

Source: Various port authorities, CBRE Research, 2023.
* Savannah figures are Jan-Aug 2023 as numbers available at time of report.

More efficient reverse logistics operations, which involve the processing of returned items, have tempered the need for more warehouse space this holiday season. Brick-and-mortar stores have taken on a larger role in reverse logistics. More than 50% of respondents to CBRE’s 2022 Global Live-Work-Shop survey said they prefer returning online purchases in-store, compared with just under 20% who prefer returning items by mail. This could lead to more in-store foot traffic, as online returns have been increasing. A weekly average of 13.1% of online orders were returned for the 2022 holiday shopping season, compared with 8.4% in 2021, according to eMarketer.

Related Services

  • Property Type

    Retail Services

    With integrated solutions, unique insight, and unmatched experience, we deliver successful outcomes for retailers, restaurateurs, investors, owners, a...

  • We represent the largest industrial real estate platform in the world, offering an integrated suite of services for occupiers and investors.