The National Retail Federation (NRF) released its 2020 sales forecast last week predicting another strong year for retail businesses. 2020 retail sales should increase between 3.5% and 4.1%, topping $3.9 trillion.
The rosy outlook follows a solid 2019, with preliminary final numbers coming in at a sales increase of 3.7% to $3.79 trillion. (The NRF had predicted a minimum 3.8% sales increase for 2019.) Online sales, which are included in the total, should grow between 12% to 15%, rising to between $870.6 billion and $893.9 billion. 2019 online sales grew 12.9% to $777.3 billion, beating its forecasted growth of at least 12%.
Retail sales have had a good run—they’re up 3.7% over the past five years. All this growth is fueled by consumer spending. “The nation’s record-long economic expansion is continuing, and consumers remain the drivers of that expansion,” NRF President and CEO Matthew Shay says. “With gains in household income and wealth, lower interest rates and strong consumer confidence, we expect another healthy year ahead.”
NRF Chief Economist Jack Kleinhenz notes that the low unemployment rate and low interest rates “have spurred home buying and mortgage refinancing that should add to consumer spending on furniture and other home-related products.”
Sounds great but let me add one note of caution. The NRF says, “The forecast assumes that coronavirus does not become a global pandemic, but business confidence and retail sales could be impacted if factory shutdowns in China continue, particularly if delivery of holiday season merchandise is affected.”
If the coronavirus continues to spread, retail sales could be impacted by continued delays of merchandise from Chinese factories. A wholesaler/e-tailer friend of mine says he’s already dealing with 45-day production delays from his suppliers and those factories don’t expect to be back at 100% capacity for 45 more days.
In addition, nervous consumers might be uncomfortable shopping in public places. Retailers—make sure your e-commerce game is strong right now. If it isn’t, updating it immediately is imperative.