Even though inflation has cooled, the cost of living’s floor remains high

Given that reality, the Retailers Association of Massachusetts expects shoppers to curb spending this holiday season.

The statewide trade association predicts a modest 1.7% increase in local holiday sales. That estimate, based on an annual survey of Massachusetts small businesses, compares to the 3.7% to 4.2% increase projected by the National Retail Federation, which accounts for businesses of all sizes.

RAM’s sales forecast signals a distinct departure from recent holiday seasons.

Sales in 2024 increased 4% in both Massachusetts and nationally, and by 3.8% locally and 5.3% nationwide in 2023.

“We are asking Massachusetts’ holiday shoppers to remember that how they invest their dollars makes a big difference for the local economy,” RAM President Jon Hurst said. “We know consumers today are cautious, and they are spending increased portions of their holiday spending budget online, but we ask them to commit to investing a good portion of their purchases right here in our communities.”

Though year-to-date sales for RAM members have risen by 2%, cost-of-living constraints on families and sellers threaten to negatively impact small businesses’ bottom lines.

That’s because costs continue to outpace sales. RAM members said payroll costs rose 2.6% this year, while fourth-quarter inventories posted a 2.4% increase over the same period last year.

RAM’s membership has begun to embrace Internet commerce; about 60% of the association’s members now sell online, compared with 26% during the 2019 holiday season, Hurst said.

Internet sales now make up 5% to 15% of the smaller RAM members’ holiday sales. Nationally, it’s estimated online sales will account for 40% of retail activity.

Locally, the holiday season makes up 20% of annual retail sales — with some stores posting 25% to 30% gains during the period.

So, how have RAM’s perceptions squared with reality?

Anecdotally, the trade group’s estimates initially seem to align with consumer sentiment, albeit derived from a small sample size.

Nationally, despite the widespread economic uncertainty, shoppers turned out in droves on Black Friday — spending billions of dollars in stores and online.

Adobe Analytics, which tracks e-commerce, said U.S. consumers spent a record $11.8 billion online on Black Friday, marking a 9.1% jump from last year. Traffic particularly spiked between the hours of 10 a.m. and 2 p.m. local time nationwide, when $12.5 million passed through online shopping carts every minute.

Consumers also spent a record $6.4 billion online on Thanksgiving Day, per Adobe. Top categories that saw an uptick in sales across both days included video game consoles, electronics and home appliances.

E-commerce platform Shopify said its merchants raked in a record $6.2 billion in sales worldwide on Black Friday. At its peak, sales reached $5.1 million per minute.

Mastercard SpendingPulse, which tracks in-person and online spending, reported that overall Black Friday sales, excluding automotive, rose 4.1% from a year ago.

No matter the degree of economic uncertainty or the differences in local and national buying habits, it’s difficult to suppress that urge to splurge on holiday gifts for friends and loved ones.

Sentinel and Enterprise

Editorial cartoon by Chip Bok (Creators Syndicate)