NRF has high hopes for strong 2021 for retail sector

One thing that has been made clear over the course of the ongoing COVID-19 pandemic is that even though many businesses, especially in certain verticals, have been up against beyond challenging conditions, others have raised business activity and sales to new levels. One sector in which that is clearly the case is retail.

That was evident in the annual retail sales forecast, for 2021, which was issued Feb. 24 by the Washington, D.C.-based National Retail Federation (NRF).

Looking at 2021, NRF said it is pegging retail sales to be up between 6.5% and 8.2%, which would represent a tally topping more than $4.33 trillion, with NRF saying that these figures come with the prospects of economic improvement spurred on by people receiving COVID-19 vaccinations, coupled with the continuing re-opening of the economy. Should this annual percentage projection come in, it would mark the best annual retail sales growth mark since 2004, said NRF.

On a media conference call about the forecast, NRF President and CEO Matthew Shay said that NRF is optimistic that healthy consumer fundamentals, pent-up demand, and widespread vaccine distribution will collectively contribute to generate increased economic growth in 2021.

And he noted that the NRF and its members have had a number of conversations with White House representatives that are leading the COVID-19 task force offering NRF members expertise, with a focus on logistics, distribution, and demand forecasting, which he described as very productive and will continue.

“Those conversations will continue, and you will see them continue in a visible over the coming weeks and months,” said Shay. “Despite the challenges of the last year, we continue to be optimistic that in the aggregate overall macroeconomic conditions are very healthy and will continue to improve as we seen those numbers and lines go in different directions and see increasing numbers of vaccines distributed and administered and we see decreases in infection rates and containing the Coronavirus and diminishing the daily infection rate and keeping people safe and healthy.” 

Shay also observed that the NRF’s forecast is largely based on solid economic fundamentals and consumer strength, in addition to the vaccines. What’s more, he said that NRF is optimistic that the economy will experience its fastest growth in more than two decades, adding that the NRF’s forecast is a snapshot based on the current economic environment, with some uncertainty in various areas but overall NRF maintains the trajectory of the economy is very solid, with the expectation of robust growth, as the vaccine continues to be distributed over the course of the next year.

Looking at 2020, Shay said that the underlying strength of the economic rebound came from the consumer and housing sectors, which positions the retail sector very well for 2021.

As for 2020, total retail sales headed up 6.7% to $4 trillion, topping 2019, which Shay said was a good year and nearly doubled 2019’s annual growth rate of 3.9%. Online retail sales in 2020 increased nearly 22%, coming in at close to $970 billion, far exceeding NRF’s forecast of 12% growth, which was made prior to the onset of the pandemic.

Robust holiday season sales helped to cap the total numbers for 2020, according to Shay, with an unexpectedly high 8% annual increase.

Online sales for 2021 are pegged to increase between 18%-to-23% to come in between $1.14 trillion and $1.19 trillion, which would set a new record.

NRF Chief Economist Jack Kleinhenz said in a statement that with the trajectory of the economy predicated on the effectiveness of the vaccine and its distribution, NRF’s principal assumption is that the vaccination will be effective and permits accelerated growth during the mid-year.

And he added that 2021 represents the second year of savings, record high stock valuations, increased home prices, enhanced government support and record low interest rates, which are all contributing factors towards the economy and consumer spending behavior.

In these uncertain times, one thing becoming more and more certain is that the retail sector is doing well and is playing a major role in the economy’s ongoing rally and recovery. And please don’t underestimate how the role of logistics and supply chains factor into that success, as its role is imperative and only gaining in traction and importance, given that the supply chain was front and center early on in the pandemic, albeit, at times, for the wrong reasons, but its role and presence are impossible to overlook.