The latest edition of the Retail Economic Report projects a 1.5% growth in total retail sales this year, with a significant acceleration to 3.5% growth expected next year. These forecasts remain unchanged, indicating a cautious yet optimistic outlook for the retail sector. Analysts at HUI Research attribute this year’s subdued performance to global uncertainty, high interest rates, and cautious consumer behavior.
William Lindquist, a prominent figure at HUI Research, emphasizes that the economic recovery is gradual, with the real growth momentum expected to pick up in the second half of 2025. He cautions against expecting a shopping spree, stating, “Recovery is on the horizon, but a shopping frenzy is not in the cards.”
Looking ahead, HUI predicts a 2.3% increase in GDP next year, followed by a slightly higher growth rate of 2.4% in the subsequent year. Household consumption is expected to rise by 3.2% in 2025 and by 3.0% in 2026, reflecting a modest improvement in consumer spending patterns.
The report highlights that the inflation rate in the grocery retail sector has stabilized at a low level, with increased sales volumes anticipated to drive industry growth. Despite recent interest rate cuts and price stability, household purchasing power remains constrained. Lindquist notes that while there is gradual strengthening in purchasing power, it may take some time before consumer willingness to spend significantly improves.
Overall, the Retail Economic Report paints a nuanced picture of the retail landscape, pointing towards a cautious yet optimistic trajectory for the sector. With global uncertainties and economic headwinds in play, retail businesses will need to navigate a complex environment to capitalize on emerging growth opportunities. As the economy gradually rebounds, strategic decision-making and consumer engagement will be key for retailers looking to thrive in the evolving market dynamics.