The holiday shopping season may not be as merry for retailers this year, with a recently-released report suggesting they could see less sales growth over the festive period.

The growth rate for holiday sales will be roughly 3% this year, S&P Global Ratings predicted in the “U.S. Holiday 2024 Sales Outlook” report it published on Tuesday. 

It marks a slower pace than 2023, when holiday sales grew 4.7%, according to the report. 

S&P Global Ratings suggested retailers will “lean on deals to bring the holiday cheer” and put more money toward advertising to draw in more shoppers. 

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Some companies have already started rolling out discounts ahead of the holidays, something that the report said they might be doing to “pull forward sales” as shoppers “grow more cautious during the weeks leading up to the holiday, particularly during an election year and a shortened holiday shopping window.” 

Retailers will likely hold more “deal events” prior to Black Friday and Cyber Monday, per S&P Global Ratings. In 2024, those two major post-Thanksgiving shopping dates will fall on Nov. 29 and Dec. 2, respectively.

Hand holding smart phone with black friday sale on screen device over blur store background, business and technology, online shopping, digital marketing concept (iStock / iStock)

When it came to the consumer, S&P Global Ratings characterized them as “price-sensitive” and expected to “maintain tight budgets and seek value in the form of promotions as they enter the holiday season” amid the current economy and labor market.

For the 2024 holiday season, cost-cutting and inventory management strategies will “mostly offset promotional pressures” and help retailers see “flat margins,” according to the report.

S&P Global Ratings said retailers that “have the financial flexibility to compete on price and convenience will continue to fare better” during the holidays.

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The report predicted value retailers that “cater to the more resilient middle and higher income consumer” and big box retailers with the “ability to effectively communicate value to consumers” will do better during the holiday seasons than other types.

“We expect other sectors, such as department stores and apparel retailers, will rely on higher discounts to increase traffic and manage inventory,” it said. “Furthermore, soft demand in specialty categories like consumer electronics and home furnishings will also necessitate promotional activity to spark demand.”

Black Friday, Woman holding many shopping bags while walking in the shopping mall background. (iStock / iStock)

Retailers that sell lots of discretionary products like department and furniture stores will “rely on promotions to generate demand” and “risk a disappointing holiday season” if they don’t, according to S&P Global Ratings. 

Over the course of November and December, U.S. retailers are expected to see $979.5-989 billion spent by holiday shoppers, the National Retail Federation separately predicted.

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A recent Bankrate survey indicated 37% of holiday shoppers intended to kick off their spending in November. About 15% plan to wait until December to open their wallets, it found.

Meanwhile, 48% had reported wanting to commence their seasonal purchases by Halloween.