Shopping center

Leading shopping center group expects holiday sales to increase 8.9%

The mall and shopping center industry’s leading organization is feeling fairly optimistic about the upcoming holiday season, despite supply chain headaches, and predicts sales in November and December will rise by 8.9% compared to last year.

The industry group, ICSC, predicts that holiday spending this year will exceed the record growth of Christmas 2020.

Last year, expenses increased by 8.3%. more than double the 3.5% average growth of the previous five years, according to holiday figures released by the National Retail Federation.

“I think it’s going to be a very strong holiday season, for obvious reasons,” said ICSC President and CEO Tom McGee. “The economy is strong, consumer spending has remained strong despite pandemic-related challenges, and there’s a tremendous amount of personal savings and pent-up demand,” McGee said.

McGee, however, warned that unprecedented supply chain backlogs could derail optimistic forecasts.

“I worry about the supply chain. For me, that’s the biggest risk around the holidays,” McGee said.

Supply chain issues, he said, will cause the holiday season to start earlier as consumers seek to avoid stock-outs and shipping delays.

“I don’t really see any dampening effects on consumer spending or demand right now,” unless there’s a sea change during the pandemic, he said.

The ICSC predicts November-December sales will hit $923 billion this year, based on a consumer survey it conducted in September.

The investigation revealed that:

  • 78% of consumers plan to spend the same or more this holiday season compared to 2020
  • 75% will start shopping earlier than usual
  • The average holiday shopper plans to spend $637 on gifts and other holiday items
  • Restaurants will also benefit from increased spending, with food and beverage establishments seeing a 35.4% year-over-year increase.

The majority of consumers surveyed – 85% – said they plan to spend money in physical stores, a crucial statistic for mall owners, who need to attract crowds even as more more spending is turning to e-commerce.

ICSC expects e-commerce sales to increase 13% from last year.

The ICSC forecast echoes other optimistic forecasts for the upcoming holiday season. Mastercard Spending Pulse said in September it expects a 7.4% increase in holiday season sales, excluding autos and gas, with in-store sales posting a 6.6% gain. Mastercard expects e-commerce sales to grow 7.6%.

“This holiday season will be defined by early purchases, higher price tags, and digital experiences,” said Steve Sadove, senior adviser to Mastercard when releasing the Mastercard forecast.

Deloitte predicted vacation growth of 7-9% and Bain said it expects sales to rise 7%.

McGee said he is seeing high levels of confidence from shopping center owners and developers who are part of the ICSC. Many centers are reporting that they have returned to, or even exceeded, pre-pandemic traffic levels.

The ICSC, formerly known as the International Council of Shopping Centres, recently hosted a gathering of industry leaders and the conversation about store openings, rental demand and shopper traffic “was most upbeat industry-strength and forward-looking, which I’ve known at all times, even before the pandemic,” McGee said.

“The tragedy of the pandemic and the level of challenges it has created has also created opportunities,” including the opening of new stores by startups. Major national retailers are also looking at the importance of brick-and-mortar stores, McGee said.

“As e-commerce has grown during the pandemic, you’ve really seen this convergence between the physical world and the digital world come to life – with things like curbside pickup and click and collect,” did he declare.

“He placed a primacy on location and having a location close to where consumers live,” McGee said. “It’s also going to impact how stores are laid out, malls are laid out, parking lots are laid out, because of the need to support these new omnichannel things that are happening.”