Dive Brief:

• The National Retail Federation said Tuesday it expects sales in November and December, excluding autos, gas and restaurant sales, to increase 3.6% to $655.8 billion — significantly higher than the 10-year average of 2.5% and above the seven-year average of 3.4% since the economic recovery began in 2009.

• The International Council of Shopping Centers also released its annual holiday forecast, predicting that holiday sales in stores would rise 3.3%, up from the 2.2% increase in the year ago period.

• Individual holiday shoppers plan to spend an average of $683.90 this year, according to the ICSC Holiday Shopping Intentions Survey. 

Dive Insight:

Holiday sales predictions this year are muted, with these forecasts predicting fairly modest growth. Both reports track with research from Deloitte, which in September measured that holiday sales in stores and online are set to increase 3.6% to 4% this year. 

But Deloitte’s prediction that physical stores will experience minimal gains was challenged by the ICSC. In-store purchases continue to dominate, the ICSC notes, with 91% of holiday shoppers planning to spend at physical stores, and 96% of shoppers planning to spend through a retailer with a physical presence. Citing strong economic fundamentals, the NRF is also forecasting non-store sales (online or direct-to-consumer) to increase between 7% and 10% to as much as $117 billion. 

The ICSC contends that shoppers favor holiday shopping in stores, in part due to many retailers’ ability to create a festive shopping experience. Moreover, the ICSC credits physical stores with contributing to many retailers’ online sales during the season: The ability to see, touch or try on merchandise sends 52% of holiday shoppers into stores, while half head to stores to get something immediately and 42% do so to avoid shipping fees, its survey found.

“Throughout 2016, consumers have demonstrated a tendency to shop across both digital and physical retail,” ICSC President and CEO Tom McGee said in a statement. “Even shoppers who purchase online favor retailers with a physical presence and an increasing number of consumers are buying online and collecting in stores. Consumer intentions show that this digital/physical convergence will be critical for the health of the industry as we close out the year.”

The ICSC found that 44% of shoppers will spend online from retailers with a physical presence and ship the purchase home while 39% spending online will pick up in store. Pure-play e-commerce retailers will enjoy smaller percentages — 21% of holiday shoppers will spend from all other pure-play online retailers and 23% will spend through catalogs and phone orders. A healthy 59% will spend at Amazon this season, ICSC found.

NRF Chief Economist Jack Kleinhenz did warn that global uncertainty, the U.S. presidential election and warm winter weather could yet temper sales. But both the NRF and the ICSC took note of the rising confidence of the American consumer. “[T]he economic spending power of the consumer is resilient and it should never be underestimated,” Kleinhenz said in a statement. “Consumers have seen steady job and income gains throughout the year, resulting in continued confidence and the greater use of credit, which bodes well for more spending throughout the holiday season.” 

NRF’s holiday sales forecast uses several indicators including consumer credit, disposable personal income and previous monthly retail sales releases. The ICSC survey was conducted online by Opinion Research Corporation between Sept. 19-22, with a demographically representative U.S. sample of 2,037 adults 18 years old and older.