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November 15, 2023

Retailers temper expectations for holiday shopping season

Photo | Courtesy of Google Maps A shopping plaza at 292 Main St. in Northborough

Citing the impacts of high inflation and interest rates, Massachusetts retailers don't expect a big bump in holiday season shopping sales this year.

The Retailers Association of Massachusetts is predicting a 1 percent increase in local sales based on a survey of its membership. Holiday sales in the 2022 season rose only 1.2 percent locally, the association said.

“With inflation and interest rates eroding the purchasing power of our consumers and the margins of small businesses, it is more important than ever that we all work harder to protect, promote, and preserve our Main Streets and our important local shopping districts," RAM President Jon Hurst said Wednesday.

November and December retail sector sales in Massachusetts (excluding restaurants, auto sales and gas) typically total about $24.17 billion, RAM said, and historically represent on average 20 percent of annual retail sales.

The association also surfaced "profitability questions" for small businesses that are seeing sales levels similar to last year, saying those questions are being brought on by "the inflation strain on families, and the increased costs on sellers including inventory, wages, borrowing costs, and energy."

The National Retail Federation projects a 3 percent to 4 percent increase in holiday season sales, and national sales rose 7 percent in the last cycle.

RAM's holiday season sales projection would be the continuation of a trend as its members are reporting average increases in sales of only about 1 percent year to date. Consumer savings rates increased and debt levels dropped during the pandemic, the association said, "yet those numbers have reversed given inflation and interest rates, and sellers report customers spending levels and the number of in store transactions have been relatively flat to 2022."

The local numbers are some of the worst in recent years, following sales increases of 9 percent in 2020, 3.9 percent in 2019, 4 percent in 2018, and 3 percent in 2017. Sales dropped by 1 percent in 2016, but rose every other year between 2010 and 2015.

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