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Dive Brief: - U.S. retail sales during November and December are forecast to grow 4.5% year over year and top $1 trillion for the first time, according to a Thursday release from Bain & Company. Inflation will account for over half of the nominal rise in sales, per the report. - While in-store retail sales are expected to grow 2.5%, online sales are expected to rise 9% year over year, according to Bain’s findings based on a survey of over 1,100 consumers. - Nearly a fourth (24%) of consumers plan to start their holiday shopping journey using AI platforms like Google Gemini, ChatGPT and Claude, an increase from 17% last year, the report found. Dive Insight: Though an increase in holiday sales is expected this year, several factors could curtail consumers’ holiday cheer. High gas prices, tariffs, growing credit card debt, geopolitical uncertainty and a challenging labor market are weighing down consumer spending power, per the report. "While US retailers have reason to rejoice this holiday season as the industry reaches the trillion-dollar milestone for the first time, there are underlying factors that will temper bottom lines," Aaron Cheris, partner at Bain & Company and global head of the firm's retail practice, said in a statement. Amid these constraints, shoppers are still expecting to divvy up their holiday shopping between online and offline channels. About 40% of respondents plan to split shopping equally between online and in-store, while 24% anticipate shopping mostly online and 13% expect to shop mostly in-store. Sales within home furnishings, electronics, appliances and food and beverage are expected to stay flat, while general merchandise, clothing, accessories and e-commerce are expected to deliver price and unit growth. “The key for retailers is to make the most of the crucial holiday season by striking the right balance when it comes to price and promotions, and making the most of new AI capabilities to enhance the customer experience and get ahead of competitors,” Cheris said. Bain & Company’s latest projections suggest that this year’s holiday sales growth will slightly outpace that of the year prior. Last year, the firm forecast a 4% increase in holiday sales year over year, exceeding $975 billion. Meanwhile, retailers are likely well-stocked for the holidays as the year’s peak shipping season rounded out, National Retail Federation Vice President for Supply Chain and Customs Policy Jonathan Gold said in August. “We had an early peak season this year as retailers brought in merchandise ahead of tariff changes in late July and responded to other uncertainties in the supply chain like the ongoing disruption brought by the conflict in Iran,” Gold said at the time.
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