New York-based consultancy Bain & Company forecasts that Santa’s sleigh may be slowing down this year. Compared to 2023 (4.2%) and 2022 (4.4%), projected total retail growth for the 2024 holiday season is 3%. The forecast is even lower than the 10-year average of 5.2% growth.

Fortunately for the supermarket industry, grocery retailers are projected to see growth anywhere between 1-5% during the holidays, while many other retail categories will see anywhere from negative high single digits (-5% or less) to roughly flat (-1%-1%). E-commerce is the only category projected to have growth in the high single digits (5% or more).

Bain reported that consumers across all income levels had a more negative financial outlook in August 2024 than in August 2023. Upper-income (more than $100,000) consumers’ intent to spend went from 124 in 2023 to 113 in 2024. Lower-income (less than $50,000) consumers’ intent to spend went down from 111 to 102, and middle-income ($50,000-$100,000) consumers’ intent to spend moved slightly from 110 to 109. Lower- and middle-income consumers’ overall outlooks went down by one point each, while upper-income consumers’ overall outlooks dropped from 105 to 99.

The reduction on holiday spending comes from the 4.2% unemployment rate in August 2024 (the second-highest since October 2021); a rise in credit card delinquencies and a lower savings rate contributing to consumers’ stress; and increased costs of basic needs like housing and healthcare taking away from potential gifting budgets.

For retailers, Bain offered the following five tips:

• Emphasize value, no matter your price point
• Entice consumers with intuitive search tools, personalized marketing, relevant gift lists and timely promotions
• Showcase exclusive products, collections, brands and partnerships
• Delight shoppers during a stressful season with upskilled holiday staff and more fulfillment options, including fast shipping and easy returns
• Make omnichannel easier — utilize excess store capacity to meet digital demand