How do holiday shopping forecasts work?
MINNEAPOLIS — Holiday spending could break an all-time record this year. The National Retail Federation predicts that sales could hit a whopping $989 billion this season.
How is holiday shopping forecasted?
"There's a reason it's an average, so it's going to be a very high spread, so some people won't spend a dime and some people love this time of year and spend a lot and everywhere in between," Seth Ketron, assistant professor of marketing at the University of St. Thomas, said. "Generally, they are pretty accurate overall. They are never going to be 100% perfect, but the goal is to get a sense of what retailers should get prepared for."
Retailers use forecasts to help determine staffing, inventory and to gauge how consumers are feeling about the economy.
"It's a constant process, they might come out with a broad forecast then adjust it as time goes on," Ketron said.
The National Retail Federation's forecast is based on data from economic indicators, including consumer spending, disposable personal income, employment and wages, inflation and previous monthly retail sales.
Ketron says AI has made forecasting consumer spending habits more accurate, but even then, things can change on a dime, like natural disasters or sudden shifts in the market.
Not all forecasts rely solely on data. Deloitte's 2024 holiday retail survey gathered responses from more than 4,000 consumers this year and found that people are looking to spend less on consumer gifts and more on experiences.
The National Retail Federation defines the holiday shopping season as Nov. 1 through Dec. 31.