For retailers expecting a solid holiday season, the preliminary data is looking good.
On Thursday, the National Retail Federation reported that sales in November increased 0.9 percent over October on a seasonally adjusted basis and were up 6 percent year-over-year unadjusted.
Online growth continued at its double-digit pace, with the NRF reporting that online and other non-store sales grew 10.5 percent year-over-year. NRF figures exclude automobiles, gasoline stations and restaurants.
“This has been an impressive start to the holiday season, perhaps the best in the last few years,” NRF chief economist Jack Kleinhenz said. “The combination of job and wage gains, modest inflation and a heathy balance sheet along with elevated consumer confidence has led to solid holiday spending by American households.”
Furthering the optimism was Craig Johnson, president of Customer Growth Partners, who said holiday spending is seeing its best performance in years, possibly since 2005, with widespread gains both in stores and online, and across both value and upmarket formats.
“We are raising our holiday forecast from our already above-consensus of plus 4.3 percent to 5.6 percent,” said Johnson. “The biggest driver of retail spending is growth in real disposable income. We’re seeing solid job growth in both services and manufacturing, record stock markets, low inflation and at least moderate wage growth, so all the ingredients are in place for a sustained rebound in consumer spending — which accounts for 70 percent of GDP.”
Johnson said the 5.6 percent pace would represent the strongest holiday retail growth since 2005 when holiday retail sales rose 6.1 percent.
Johnson bases his forecast on Department of Commerce data for November, and on his team’s field research through December to date of America’s 50 largest retailers across over 90 major shopping venues nationwide. “Consumers are spending at a pace not seen since before the Recession,” Johnson said.
For total holiday sales, CGP raised its forecast to $671 billion from $663 billion made earlier this year. The sales are being paced by online, up 10.5 percent; home improvement, 8.5 percent; off-price stores, 7.4 percent and superstores/clubs, 6.4 percent.
Most women’s apparel retailers and sporting goods chains are sluggish, however, and Johnson believes department stores are “a mixed bag” though there’s some lift in traffic there.
Johnson’s list of the hottest products of the season include:
- Apple’s iPhone X, iPhone 8 Plus and Series 3 Watches
- Nintendo Switch
- Microsoft’s Xbox One-S
- WowWee’s Fingerlings
- Spin Master’s Hatchimals, Air Hog drones and PAW Patrol Lookout Tower
- Hasbro’s NERF and Star Wars/Last Jedi toys
- Women’s boots and ripped jeans.
“Today’s report is indicative of a strong consumer who is confident about the current and future state of the economy,” Kleinhenz said. “The improved willingness to spend and the purchasing power of consumers will continue to be an economic driver of growth into 2018.”
Kleinhenz said there were broad-based monthly increases across most sectors with the exception of general merchandise stores, which remained unchanged. The NRF is forecasting holiday sales to increase between 3.6 and 4 percent over last year.
According to the NRF:
- Online and other non-store sales were up 2.5 percent seasonally adjusted from October and up 10.5 percent unadjusted year-over-year.
- Electronics and appliance stores were up 2.1 percent seasonally adjusted over October and up 7.3 percent year-over-year unadjusted.
- Furniture and home furnishings stores were up 1.2 percent seasonally adjusted over October and up 8.6 percent year-over-year unadjusted.
- Building materials and garden supplies stores were also up 1.2 percent seasonally adjusted from October and up 11.2 percent year-over-year unadjusted.
- Sporting goods stores were up 0.9 percent seasonally adjusted over October and up 2.1 percent unadjusted year-over-year.
- Clothing and accessories stores were up 0.7 percent seasonally adjusted over October and up 4.9 percent year-over-year unadjusted.
- Health and personal-care stores were up 0.4 percent seasonally adjusted over October and up 3.2 percent year-over-year unadjusted.
- Food and beverage stores were up 0.2 percent seasonally adjusted over October and up 3.7 percent year-over-year unadjusted.
- General merchandise stores were unchanged from October but up 4.4 percent year-over-year unadjusted.