WASHINGTON-Specialty stores and general merchandisers posted sales gains in October while sales at department stores declined, the Commerce Department Department’s monthly report showed today.

Sales at apparel and accessories stores rose a seasonally adjusted 0.6 percent to $21.5 billion last month, while sales at department stores fell 0.7 percent to $12.6 billion. Sales at general merchandise stores, a category that includes department stores and discounters, rose 0.4 percent to $55 billion.

Non-store sales, which include Internet and catalogue sales, rose 1.5 percent to $48.2 billion.

In the overall economy, sales rose 0.8 percent to $465.9 billion, slightly ahead of economists’ expectations.

The data is for the month before the disruptive presidential election in early November, as well as before the lead-up to the all-important holiday season.

The news was largely a positive sign for retailers heading into the critical holiday shopping season, although the year-over-year trend has been weak for some categories.
“October’s strong sales and September’s upward revisions show that consumer spending improved despite the headwinds from the polarizing election and warmer than normal weather,” said Jack Kleinhenz, chief economist at the National Retail Federation. “Recent solid wage gains and other fundamentals are generating uplift, positioning consumers and retailers for the healthy holiday season NRF is forecasting.”   
The NRF expects holiday retail sales to increase “a solid” 3.6 percent to $655.8 billion.
 Scott Hoyt, senior director of economics at Moody’s Analytics,” said consumer spending is “solid,” which bodes well for the holiday season.
 “There was at least a hint of improvement for specialty stores in October so we will have to see if it is sustained,” Hoyt said.
Hoyt said department store sales seem to be “falling off of a cliff right now,” pointing to six straight months of declines. Sales are down 7.3 percent on a year-over-year basis, according to the government data.
“E-commerce keeps wining,” he said, noting that on a year-over-year basis sales were up 12.9 percent. “Clearly there is a continued movement of sales to online channels. That is coming at the expense of brick and mortar, particularly in the apparel category,” Hoyt said.
Craig Johnson, president of Customer Growth Partners, said year-over-year retail sales growth in October was about 2.3 percent, excluding automobiles, restaurants and gas sales.
“That’s a decent number but not great,” Johnson said.
The month of October was “difficult” for outerwear sales, in particular, because of unseasonably warm weather, he noted. “Now that the colder weather seems to be returning, that should balance out over time. In a sense that is like veiled good news.”
“These number are not at all great numbers by any means but they aren’t a total disaster if you account for the outwear weakness,” Johnson said.
Strong sales growth in areas such as health and personal care, including not only drug stores but also nutrition and beauty stores, also helped boost the top line retail sales number.
“Last but not least, the entire migration to online sales continues to show up and that part of the economy has gotten to be so big,” he added. “It is a sizable enough figure. The growth in online sector is up in the neighborhood of about $4 billion for the month. That in itself accounts for a lot of the weakness in some of the other sectors.”
Customer Growth is forecasting a 4.1 percent increase in holiday retail sales, which includes November and December, on a year-over-year basis.
Chris G. Christopher, Jr. director of consumer economics at IHS Global Insight, said there were “broad-based” gains on the retail sales front. He said the “winners” were autos, electronics, building materials, grocery, health, gasoline, clothing, sporting goods, and non-store sales.
Clothing store sales jumped a whopping 0.6 percent in October, but November is unlikely to be a very good clothing month, as the first half of November has been unseasonably warm in many parts of the country,” Christopher said. “Department stores continue to get hammered while the onliners are clearly outpacing the traditional brick-and-mortar retailers. Department stores have been under water since July while onliners keep surging ahead.”
 “The strong October showing is pointing to a consumer that shrugged off the heightened political uncertainty of the presidential election and rising pump prices and decided to head out to the mall,” Christopher said. “ We expect spending to continue be relatively robust in November since many retailers have already started their deep holiday price discounts.”
In addition, real consumer spending growth is expected to “remain one of the sources of economic growth, supported by gains in real disposable income and jobs added to the economy,” he added.” Fourth-quarter consumer spending and retail sales are looking rather bright after a very modest third-quarter showing.”

 

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