Retail holiday sales are expected to increase a robust 5 to 5.6 percent over last year’s shopping season, according to Deloitte’s annual retail holiday sales forecast.

Deloitte’s retail and distribution practice expects total holiday sales (seasonally adjusted and excluding motor vehicles and gasoline) to exceed $1.10 trillion between November and January.

Additionally, Deloitte forecasts a 17 to 22 percent increase in e-commerce sales in 2018 compared with 16.6 percent in 2017. E-commerce sales are expected to reach $128 to $134 billion during the 2018 holiday season.

“The anticipated growth in holiday sales is likely because of solid disposable personal income growth, which we expect will be in the 5 to 5.4 percent range. That is above last year’s 4.7 percent,” said Daniel Bachman, Deloitte’s U.S. economic forecaster. “A strong labor market should also aid retail spending, along with elevated consumer confidence and a stable personal savings rate of around 7 percent.”

While these fundamentals are expected to boost holiday spending, Deloitte’s economist cited potential risks that may affect spending in the coming months. Some of the impact of Fed tightening could be felt before the end of the year. Some observers have speculated the stock market is overvalued. A significant decline in the market could push down consumer confidence and reduce household wealth, both of which would moderate the forecasted rise in retail spending.

“Consumer sentiment and spending indicators provide a healthy outlook for retailers across channels with strong expectations for store-based and online retailers,” said Rod Sides, vice chairman, Deloitte LLP and U.S. retail and distribution sector leader. “We’ve seen retailers continue to advance their approaches to shipping, delivery, in-store experiences and tech-enabled commerce. That can include things like showrooms, interactive displays that replace sorting through racks with simple, easy selections or web-based visualization that lets people get a feel for style, fit and appearance from apparel to home decor. Voice-enabled shopping and shortened delivery times may also accelerate the competition around fast and easy purchasing options. The leading retailers this holiday season could be the ones who are able to strike the right balance between innovation, experience, and value that best engages the consumer and stands out in a busy season.”

Note to Readers :

Deloitte is forecasting a 5 to 5.6 percent increase in 2018 holiday sales compared with 2017. Retail sales between November 2017 and January 2018 (seasonally adjusted and excluding automotive and gasoline) grew 5 percent and totaled $1.05 trillion according to the U.S. Commerce Department.

Deloitte is forecasting a 17 to 22 percent increase in 2018 e-commerce sales compared with 2017. E-commerce sales between November 2017 and January 2018 (seasonally adjusted and excluding gasoline stations, motor vehicles and parts dealers and food services) grew 16.6 percent totaling $109.8 billion.