Key takeaways
- J.P. Morgan Research forecasts solid e-commerce holiday sales growth of +7.5% year over year, with e-commerce penetration making up 24.5% of adjusted U.S. retail sales.
- For brick-and-mortar, it expects to see +2.5% growth in expenditure on apparel and footwear, consistent with the five-year pre-pandemic average.
- To compensate for the condensed holiday shopping calendar, retailers are running earlier promotions with greater markdowns to boost sales.
Updated: November 25, 2024 | Originally published: December 15, 2023
With only 27 days between Thanksgiving and Christmas, the 2024 holiday season is the shortest since 2019. However, holiday sales forecasts are largely positive, with consumers feeling festive thanks to a more stable economic landscape. In light of this renewed consumer confidence, what’s the outlook for both e-commerce and brick-and-mortar sales in the U.S. this season?
“Consumers face still-elevated inflation and interest rates, and they continue to trade down, deal-hunt and remain price conscious. However, macro headwinds are broadly stable versus a year ago.”
Doug Anmuth
Head of U.S. Internet, J.P. Morgan
What’s the outlook for e-commerce this holiday shopping season?
With retailers running earlier promotions and deeper markdowns, e-commerce sales this holiday season are projected to post solid gains.
“Heading toward Thanksgiving and the Cyber Five weekend, we’re expecting strong e-commerce holiday sales growth of +7.5% year over year,” said Doug Anmuth, head of U.S. Internet at J.P. Morgan.
While this is below last year’s growth of +10% against tougher year-over-year comps, e-commerce’s share of total retail sales continues to expand. “This season, we project e-commerce penetration at 24.5% of adjusted U.S. retail sales — up 119 basis points from 2023,” Anmuth said. “We expect these share gains to continue throughout the fourth quarter and into 2025 and believe e-commerce penetration could nearly double to over 40% in the longer term.”
The positive outlook for e-commerce is in part due to a more favorable macro climate. “Consumers face still-elevated inflation and interest rates, and they continue to trade down, deal-hunt and remain price conscious. However, macro headwinds are broadly stable versus a year ago,” Anmuth noted.
To compensate for the condensed festive calendar, retailers are rolling out initiatives to attract holiday shoppers. “Amazon, Walmart and Target are all running early promotional cycles, which should support demand and ease stress on retail networks during the holiday season. Also, we believe markdowns are deeper relative to the 2023 holiday shopping season, with Target reducing prices across more than 8,000 items year to date, Walmart conducting around 6,000 rollbacks across the U.S., and Amazon continuing to price-match,” Anmuth added.
In addition, some retailers are leveraging generative AI to drive supply chain efficiencies — with tools that assess orders, predict inventory needs and more — while others are focused on enhancing delivery speeds. “The latter could help drive higher purchase consideration and frequency, particularly across everyday essentials and consumables. This, combined with promotional activity and discounting, should support holiday demand,” Anmuth said.
Are holiday shoppers visiting brick-and-mortar stores?
Brick-and-mortar sales are normalizing and are expected to be in line with pre-pandemic trends this festive season, with opportunities for further growth. “We forecast +2.5% growth in expenditure on apparel and footwear, consistent with the five-year pre-pandemic average,” said Matthew Boss, head of Department Stores, Specialty Softlines and Leisure at J.P. Morgan.
While this is lower than the +3.2% growth seen in 2023, it is in part due to the shorter holiday shopping season. “Retailers face an unfavorable calendar, with five fewer shopping days year over year,” Boss said. “Despite this, our +2.5% holiday 2024 forecast equates to a +5.7% two-year stack, which is above 2018/2019’s +1.5% two-year stack.”
Looking further ahead, brick-and-mortar sales could receive a boost from stronger household balance sheets. “Our macro wallet math points to a sequentially improving backdrop notably for high-income shoppers, who are responsible for 40% of U.S. consumer spending. These consumers could benefit from $54 trillion in net wealth creation relative to pre-pandemic, which can be attributed to increased real estate equity, stock market returns and other sources of income,” Boss said. Even among lower-income shoppers, analysis from J.P. Morgan Research points to a $164 billion year-over-year uplift to overall consumer spending through December 2025.
“All in all, we see this improved consumer backdrop supporting apparel and footwear sales, which could experience +3.0% growth year over year into 2025,” Boss added.
Related insights
-
Global Research
Global Research
Leveraging cutting-edge technology and innovative tools to bring clients industry-leading analysis and investment advice.
-
Global Research
Following the Fed’s decision to pause rate cuts, what could its next move be?
March 03, 2025
With uncertainty about government policies historically elevated, the Fed is firmly on hold as it awaits more clarity about the economic outcome.
-
Global Research
The probability of a recession has now fallen below 50%
May 19, 2025
The recent de-escalation of trade tensions will likely reduce the risk of a U.S. recession this year.
This communication is provided for information purposes only. Please read J.P. Morgan research reports related to its contents for more information, including important disclosures. JPMorgan Chase & Co. or its affiliates and/or subsidiaries (collectively, J.P. Morgan) normally make a market and trade as principal in securities, other financial products and other asset classes that may be discussed in this communication.
This communication has been prepared based upon information, including market prices, data and other information, from sources believed to be reliable, but J.P. Morgan does not warrant its completeness or accuracy except with respect to any disclosures relative to J.P. Morgan and/or its affiliates and an analyst's involvement with any company (or security, other financial product or other asset class) that may be the subject of this communication. Any opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Past performance is not indicative of future results. This communication is not intended as an offer or solicitation for the purchase or sale of any financial instrument. J.P. Morgan Research does not provide individually tailored investment advice. Any opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and are not intended as recommendations of particular securities, financial instruments or strategies to particular clients. You must make your own independent decisions regarding any securities, financial instruments or strategies mentioned or related to the information herein. Periodic updates may be provided on companies, issuers or industries based on specific developments or announcements, market conditions or any other publicly available information. However, J.P. Morgan may be restricted from updating information contained in this communication for regulatory or other reasons. Clients should contact analysts and execute transactions through a J.P. Morgan subsidiary or affiliate in their home jurisdiction unless governing law permits otherwise.
This communication may not be redistributed or retransmitted, in whole or in part, or in any form or manner, without the express written consent of J.P. Morgan. Any unauthorized use or disclosure is prohibited. Receipt and review of this information constitutes your agreement not to redistribute or retransmit the contents and information contained in this communication without first obtaining express permission from an authorized officer of J.P. Morgan.