The National Retail Federation projects retail sales growth in 2021 with effective vaccine rollout

The year 2020 was a challenging one—particularly for the automotive industry. During the start of the pandemic, U.S. vehicle sales fell as much as 52%. Nevertheless, the industry went on to rebound and see year-over-year growth in new vehicle sales.

This showcases the automotive industry’s resilience, especially auto dealers who found innovative ways to offer car buyers a convenient and safe car purchase process. However, according to BCG, there are concerns about projections that auto sales will not rebound to pre-COVID-19 levels until 2023.

Nevertheless, while some of the information can seem bleak, there are some bright spots that can encourage auto dealers. On February 24, 2021, the National Retail Federation (NRF) published a report highlighting some points of optimism regarding the retail sales market. Here are some takeaways from their findings and why the future is bright for dealers:

Retail Sales Are Projected to Grow almost Two Percent—If Vaccinations Continue

The annual forecast by the NRF indicates that retail sales will grow from 6.5% to 8.2% (which represents $4.33 trillion). This projection has been made because of the emergence of promising COVID-19 vaccinations and the subsequent rollout. Currently, 7.5% of the United States population has been vaccinated with two doses: around 23 million Americans.

Now, approximately 1.7 million shots are being given per day. If these numbers hold, the country can reach 90% herd immunity by November of this year. This situation, along with increased cooperation between businesses, local health officials, and government officials, means that we could see higher rates of citizens with the ability to move freely without health concerns. This development will benefit all businesses in each sector as things move back to a more recognizable normal.

Online Sales Will Continue to See an Uptick

Dealerships that have shifted to online sales are likely to reap the rewards of the switch. The NRF forecasts that online sales will grow between 18% and 23% ($1.14 trillion and $1.19 trillion). Customers have gotten used to the convenience provided by online merchants. As a result, consumers are likely to stick with this form of shopping.

Additionally, as vaccines are distributed and public health recommendations are made, it may still be a while before people feel comfortable shopping in person again. In short, dealers should continue to optimize their online shopping experience at dealerships—as this aspect of consumer shopping isn’t going away any time soon.

Increased Jobs and Pent Up Demand Will Drive Commerce in The Latter Part of 2021

In 2020, a lack of supply in new and used vehicles drove up demand. However, as supply levels normalize, dealers will need another cause for increased demand. According to NRF, this problem could fix itself. The organization projects that 200,000 to 300,000 jobs will be added in the latter part of this year and that people will be in a better place to spend their earnings.

Throughout much of the pandemic, there has also been an uptick in individuals putting more money into savings. This could lead to consumers increasing their spending once they feel more secure in the economy.

Again, much of this progress depends on the vaccination rollout. NRF Chief Economist Jack Kleinhenz had this to say about the impact the vaccination will have on the future of the U.S. economy:

“The trajectory of the economy is predicated on the effectiveness of the vaccine and its distribution. Our principal assumption is that that the vaccination will be effective and permits accelerated growth during the mid-year. The economy is expected to see its fastest growth in over two decades.”

The Future Looks Bright for Dealers —If Vaccines Continue

The economy will rebound again. However, the amount of time it will take for this to happen depends on how quickly government and health officials can work together to get as many American citizens vaccinated as possible. This action will facilitate the widespread opening of the economy, the addition of more jobs, and steady income for consumers who want to feel secure again before making big purchases.

Furthermore, if the current vaccine numbers hold, it’s possible that herd immunity could occur by the fall of this year. Dealers can prepare themselves by facilitating online car buying, multichannel digital marketing, and keeping in line with health guidelines.

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