WASHINGTON — Sales at apparel specialty stores rose in November, while department stores and discounters continued to struggle, according to the U.S. Commerce Department’s monthly retail sales report released on Thursday.
Economists and retail analysts said retail sales bounced back in November after weakening in October due primarily to store closures associated with Hurricane Sandy at the end of that month. While that held true for apparel specialty stores, the broad general merchandise category, including department stores and discounters, did not see the same kind of boost.
Apparel and accessories stores posted a 0.9 percent seasonally adjusted increase to $20.3 billion in November compared with October, while sales at department stores fell 0.8 percent to $14.9 billion last month. Sales at general merchandise stores, a category that includes department stores and discounters, declined 0.9 percent to $51.9 billion.
On a year-over-year basis, apparel specialty store sales rose 6.4 percent, while department store sales fell 3.1 percent and sales at general merchandise stores dropped 2.7 percent.
“I think retailers made up for a lot of lost sales due to the weak start in the month in which Sandy was the more serious of the events [impacting sales],” said Kevin Regan, senior managing director at FTI Consulting. “But we also had an election and that can distract consumers as well.”
Regan said specialty stores seem to continue to “resonate” with consumers, while department stores and discounters appear to be affected by concerns over the fiscal cliff debate in Washington — a package of tax hikes and steep spending cuts that will take effect on Jan. 1 unless Congress and the Obama administration can reach a compromise to avert it.
“Wal-Mart has polled its customers and there is a concern about holiday spending on their part which they attribute to fear of the fiscal cliff,” Regan said. “When all customers realize they will get impacted by some kind of tax hike and tax penalty, that could cause them to be on tougher terms monetarily…and lower to middle income customers don’t have as much discretionary spending.”
Jack Kleinhenz, chief economist at the National Retail Federation, said, “Stable employment rates, lower gasoline prices and a recovering housing market have all contributed to a holiday shopping season that is on target to meet our original expectations. American consumers are expected to spend cautiously as they monitor the situation in Washington and wrap up their holiday shopping lists.”
In the overall economy, retail sales rose 0.3 percent to $412.4 billion in November.
“Despite the positive numbers today and the relatively strong outlook for holiday retail sales, we are not in a consumer-led recovery,” said Chris G. Christopher Jr., senior principal economist at IHS Global Insight. “Consumer pessimism is back due to worries over the fiscal cliff, and real consumer spending growth is likely to be 1.5 percent in the fourth quarter, about the same pace as the second and third quarter. These growth rates are nothing to write home about. Consumers are holding on and still face strong headwinds.”
IHS is forecasting a 3.9 percent increase in holiday retail sales, which is softer than in the past two years, and a 17 percent increase in online holiday sales, compared with a 16 percent rise in 2011.