The National Retail Federation expects retail sales growth between 4% and 6% in 2023 with revenues reaching between $5.13 trillion and $5.23 trillion, the organization stated in its annual industry forecast.
The 2023 figure compares with 7% growth to $4.9 trillion in 2022. The 2023 forecast, NRF noted, is above pre-pandemic 3.6% average annual retail sales growth levels. The organization expects e-commerce sales, which are included in the total figure, to grow between 10% and 12% year over year to a range of $1.41 trillion to $1.43 trillion. Although many consumers continue to appreciate the conveniences offered by online shopping, multichannel sales drive much of the non-store growth, where the physical location still plays an important component in the fulfillment process. As their role has evolved in recent years, brick-and-mortar stores remain the primary point of purchase for consumers, accounting for approximately 70% of total retail sales, according to NRF.
Although consumers are still looking to spend judiciously, NRF projects full-year GDP growth of around 1%, reflecting softer economic activity, or about half of the 2.1% increase from 2022. Inflation is declining but will remain between 3% and 3.5% for all goods and services for the year, the organization predicted. Although the labor market has remained resilient, NRF anticipates job growth to decelerate in the coming months given lesser economic activity, with the unemployment rate to exceed 4% before next year.
“In just the last three years, the retail industry has experienced growth that would normally take almost a decade by pre-pandemic standards,” NRF President and CEO Matthew Shay said. “While we expect growth to moderate in the year ahead, it will remain positive as retail sales stabilize to more historical levels. Retailers are prepared to serve consumers in the current economic environment by offering a range of products at affordable prices with great shopping experiences.”
NRF chief economist Jack Kleinhenz pointed out that aggregate economic activity has held up well, despite restrictive monetary policy designed to curb inflation. He added recent financial market and banking sector developments and some unresolved public policy issues complicate the outlook.
“While it is still too early to know the full effects of the banking industry turmoil, consumer spending is looking quite good for the first quarter of 2023,” Kleinhenz said. “While we expect consumers to maintain spending, a softer and likely uneven pace is projected for the balance of the year.”