Holiday spending exceeds $18 billion; Growth to continue in 2023, possibly as much as 4% to 6%

Taxed sales in Alabama exceeded $18 billion in November and December 2022, slightly outpacing what the Alabama Retail Association predicted.

Sales in the traditional holiday shopping months grew 5.6% compared to the same two months in 2021. Alabama Retail had projected a 5% growth.

Sales tax collections for all of 2022 grew 7.85% over 2021, based on state records.

Taxed sales in Alabama for the final two months of the year reached $18,021,642,720.87, according to the Alabama Revenue Department. Nationally, holiday retail sales grew 5.3%*, according to the National Retail Federation.

The $18 billion in Alabama holiday spending is based on sales tax collections on general merchandise, restaurant and other food service, automobiles, machinery and vending, plus collections made through the state’s Simplified Seller Use Tax (SSUT). Alabama Retail defines holiday spending as all taxed sales during the months of November and December.

While Alabamians spent more than projected over the winter holidays, the rate of their spending growth was more in line with pre-pandemic levels,” said Alabama Retail Association President Rick Brown. Holiday spending growth in Alabama ranged from 2.66% to 5.15% between 2014 to 2018. Alabama’s holiday spending growth jumped to almost 10% in 2019, then exploded to almost 12% and more than 15% in 2020 and 2021, respectively. “While no one expected the growth rate of the past three years to continue, Alabama’s retail economy remains strong,” said Brown.

Retail sales growth should continue to slow in 2023, the Alabama Retail Association said. “At this moment, while we expect the pace of growth to continue to slow appreciably, we aren’t anticipating a deep downturn,” said Brown. NRF expects retail sales, excluding those at auto dealers, gas stations and restaurants, to grow between 4% and 6% in 2023.

The U.S. Census Bureau said overall January retail sales were up 3% from December and up 6.4% year over the previous January, mainly due to wage growth and easing inflation. The Alabama retailers we spoke with had mixed sales results for January 2023. Some expressed optimism for annual growth at a slower pace, while others expect decreased sales. They all expressed some uncertainty about how the rest of the year will unfold. They called 2021 a phenomenal and unprecedented year that they never expected to be repeated. “The customer showed more resiliency than was expected” in 2022, one said.

Another said, “2021 was our best year ever and 2022 was better, it was crazy.” Even so, their stores and their customers continue to contend with inflationary costs on some goods, which makes it difficult to gauge what will happen in the year ahead, they said. Food retailers and restaurants especially expect to feel the pinch of inflation throughout the year.

Retailers located in Alabama continue to sell instore, while doing an increasing amount of business online. For holiday 2022, remote online sellers accounted for 20.3% of total sales. For all of 2022, those paying the Simplified Sellers Use Tax remitted almost 17.5% of all of the sales taxes collected. In 2022 compared to 2021, Alabama saw an almost 20% growth in the amount of sales tax collections via those remote online, phone, catalogue and other non-store sales.

Alabama retailers are thankful for the customers who supported them throughout 2022 and look forward to finding ways to engage with loyal and new customers as 2023 unfolds,” said Brown.

*NRF excludes automobiles, gasoline and restaurant sales from its holiday sales numbers.

The Alabama Retail Association represents retailers, the largest private employer in the state of Alabama, before the Alabama Legislature and the U.S. Congress. Through sales of food, clothing, furniture, medicine and more, our 4,300 independent merchant and national company members touch almost every aspect of daily living. Since 1943, we’ve worked to promote what’s best for the retail industry in Alabama. Whether voicing the retail view when public policy is made, educating members about issues that impact them, negotiating rates for benefits and services or communicating the retail story, the Alabama Retail Association and its members are better together.

MEDIA CONTACT: Nancy King Dennis | 334.868.2195

Originally posted Feb. 13, 2023, and updated March 29, 2023, with NRF annual sales forecast