Up to €5.4bn could be spend by consumers this Christmas, Retail Ireland has predicted.
This works out at around €832 per household, the organisation claimed, and represents a 5% increase on what was spent last year.
In total, the Christmas spend will be €1.58bn more than is spent during the other months of the year.
Retail Ireland has said the mood across retail remains broadly positive, but somewhat apprehensive.
"Heightened Covid concerns and the possibility of new restrictions have significantly increased uncertainty in recent days," said Arnold Dillon, Director of Retail Ireland.
"The last few months have seen a strong recovery across the sector. The easing of restrictions since early summer prompted a strong and steady lift in consumer sentiment. This, combined with significant pent-up demand, led to positive sales figures over recent months," he added.
We need your consent to load this rte-player contentWe use rte-player to manage extra content that can set cookies on your device and collect data about your activity. Please review their details and accept them to load the content.Manage Preferences
Retail sales for September 2021 were 12.6% higher than the same month in 2019, prior to the arrival of Covid-19.
However, figures released by the Central Statistics Office on Monday show sales fell 1.7% between September and October, although volumes in October were up 1.5% compared to the same month last year.
"Headline figures of course mask other trends in the sector and not all parts of retail are experiencing the same uplift as others," Mr Dillon said.
"The lack of office workers and tourists, along with the extended closure of bars and restaurants, has seen footfall drop dramatically in key urban retail districts."
As a result, retailers say cities, and in particular Dublin which is so reliant on commuters and foreign visitors, have been badly hit.
Although the trend was beginning to correct itself last month, consumers have since reduced their levels of activity on foot of Government public health advice.
"Reduced activity in the hospitality and events sector, spills over into retail and there are simply less shoppers around town," Mr Dillon said.
"Visits to the city during the pandemic have been more purpose driven. Casual browsing has reduced considerably. This led to lower number of transactions in stores, although they were typically higher value."
He added that in the immediate term, a sustained opening and recovery of the city's wider economy is required to restore more normal levels of retail footfall.
Aside from the impact of the pandemic, retailers are also facing additional challenges including rising inflation, currently running at over 5%, as well as staff shortages and the shift from bricks and mortar to online shopping.