CGP Forecast: Record Year Ahead for Retail

Citing America’s “resilient” shoppers, Customer Growth Partners predicts that 2021 retail sales will increase 8.1 percent to a record $4.26 trillion, despite COVID-19.

The heady outlook beats the strong 7.1 percent gain in 2020 that came in the face of massive pandemic-related store closings during the spring, CGP reported.

CGP’s outlook assumes the pandemic will be effectively contained by mid-summer, though a renewed spike in COVID cases later this year could diminish the current outlook.

The 8.1 percent increase for 2021 will mark the fastest retail pace this century, and is far above the 15-year, 3.7 percent compound annual growth rate, according to CGP.

“In light of COVID impacts and lingering economic uncertainty, the extraordinary year-over-year increase in holiday sales has barely let up in 2021, demonstrating the optimism and resilience of everyday Americans, nationwide,” said Craig Johnson, president of CGP, which charted a 6.8 percent gain in U.S. 2020 holiday sales.

“Clearly, households without jobs struggled, but the new rounds of federal assistance are helping, and our field team is seeing new-found momentum across income levels, and at both deep-value and luxury venues,” said Johnson.

“Digital channels will drive some 56 percent of the aggregate increase in 2021 sales, while big box stores, e.g., Costco, Dick’s Sports, Home Depot, Target, will see soft footfall growth balanced by strong online growth, yielding robust net traffic growth—and even some increased in-store traffic.  Average tickets and net traffic will each rise by 3 to 5 percent, generating the 8.1 percent sales increase.  Home and hardlines categories – notably home improvement and electronics – will thrive in 2021, slowing somewhat from holiday 2020 but is still seen setting the pace at 12.1 percent growth, as consumer spending continues to rotate from apparel towards the home and work-from-home lifestyles.”

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Sporting goods also slows from its torrid holiday pace, but still rises a vigorous 9.8 percent, according to CGP. As restaurants and bars reopen, the food and beverage category will “slowly normalize, easing to 4.6 percent growth. Health and personal care stores will accelerate to 5.5 percent growth in 2021.”

Department stores are seen down 12.5 percent; apparel stores, down 8.7 percent, which for both retail sectors represent improvements from last year.

“Going forward, the key question is how far 2021’s rapid growth will sustain in the second half and the out-years—which is a function of both the pandemic situation and the fundamental health of the American consumer: most importantly, is job growth improving,” Johnson said.

This year did start off strong for retailers, with sales up 9.2 percent in January, according to Mastercard SpendingPulse. Online sales alone rose 62.1 percent, Mastercard reported last week.

“A big, bright note from January is that consumers are spending,” said Steve Sadove, Mastercard senior adviser and former chairman and chief executive officer of Saks Inc. “While we know that consumers are also saving their stimulus funds and paying down debt, these numbers show that stimulus is helping to boost sales for retailers around the country.”

Mastercard cited momentum from the holiday 2020 continuing last month.

Forecasts by the 20-year-old CGP rely on combined top-down and bottom-up models, its Big Data platform which generates operating metrics from 60 major retailers at 100-plus benchmark venues nationwide, and surveys by the 18 members of CGP’s research field team.


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