2024 Outlook on the Retail Industry

Image credit: National Retail Federation
Image credit: National Retail Federation

During the National Retail Federation’s fourth annual State of Retail & the Consumer virtual discussion yesterday, Walmart U.S. President and CEO John Furner and NRF President and CEO Matthew Shay talked about the health of the American consumer and the retail industry in general. 

NRF also announced its forecast that retail sales during 2024 will grow between 2.5% and 3.5% from 2023 to between $5.23 trillion and $5.28 trillion. The 2024 sales forecast compares with 3.6% annual sales growth of $5.1 trillion in 2023 and is in line with the 10-year pre-pandemic average annual sales growth of 3.6%.

“The resiliency of consumers continues to power the American economy, and we are confident there will be moderate but steady growth through the end of the year,” NRF President and CEO Matthew Shay said. “Successful retailers offer consumers products and services when, where and how they want to shop with prices they want to pay.”

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Projected Retail Sales Growth

Non-store and online sales, which are included in the total figure, are expected to grow between 7% and 9% year over year to a range of $1.47 trillion to $1.50 trillion. That compares with non-store and online sales of $1.38 trillion in 2023, as stated during the discussion. 

NRF projects full-year GDP growth of around 2.3%, a slower speed than the 2.5% in 2023 but strong enough to sustain job growth. Inflation prices are also expected to moderate to 2.2% on a year-over-year basis, due to a cooling economy, the labor and product market coming into better balance and retreating housing costs.

“The economy is primarily supported by consumers who have shown much greater resilience than expected, and it’s hard to be bearish on the consumer,” NRF Chief Economist Jack Kleinhenz said. “The question for 2024 ultimately is, will consumer spending maintain its resilience?”

A Strong Job Market Supporting Sales Growth

A tight labor market, with its robust job growth and wage gains fueling consumer spending, is expected to cool in 2024. With the pace of the economy slowing in 2024, NRF expects about 100,000 fewer jobs on average per month compared with 2023 and the unemployment rate to average 4% for the full year.

Kleinhenz also noted that consumer balance sheets and debt servicing levels remain in good condition. Rising home and stock prices in 2023 likely stimulated greater consumer spending via the so-called wealth effect and this should continue in 2024. 

Several surveys reveal that consumers appear to have a favorable outlook which should also support their willingness to spend. Yet, many consumers are feeling a pinch from tighter credit and inflation. 

Serving the Future Customer

Consumer expectations are constantly changing, and ever since the start of the pandemic, retailers have been rushing around trying to change up their business models to reach customers where they want to shop. 

“I love innovation and learning about what’s next post-pandemic,” Furner stated. We’re at an interesting point where we will see even more innovation, whether through product supply or the supply chain, that will give us the ability to serve customers in a way that makes their life better.”

With the amount of new tools that retailers have at their fingertips, Furner thinks 2024 will be better than 2023 in terms of customer satisfaction. Disruption will continue to happen, but it’s the competition that makes businesses better and more able to handle what gets thrown at them in the future.