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November retail sales numbers may have disappointed but that doesn’t mean the entire holiday season will be one big lump of coal, analysts say.
Retailers have urged consumers to get the items on their wish lists early due to supply-chain backlogs and other issues that could keep presents from reaching their destinations in time. Some analysts say shoppers have heeded that warning, driving up October retail sales numbers but pushing down the November tally.
GlobalData highlights the COVID-related changes to the 2020 holiday season, when fewer people gathered to celebrate and in-store shopping declined.
“This year, all of that changed and most shoppers reverted to old habits – visiting malls, buying things in preparation for gatherings, and treating themselves to bargains and deals,” wrote Neil Saunders, managing director at GlobalData.
See: U.S. retail sales soften in November as consumers face high inflation
“The main change was in the timing of purchasing and spending, which was spread more evenly across November as opposed to being concentrated into the last week around Thanksgiving. In our view, it is also likely that a modest amount of December spending has been pulled into November as shoppers started their holiday purchasing earlier.”
Plante Moran Financial Advisors notes the decline versus retail sales in October, but highlights the 1% increase at bars and restaurants.
“The data suggests that consumers may have simply pulled much of their holiday shopping forward, getting a jump on the spending season. The risk of another outbreak curtailing activity closer to the holidays may have played a role but fears of shortages and delayed shipping for online purchases likely played a significant role as well,” wrote Jim Baird, chief investment officer at Plante Moran.
“Softer retail sales in November are disappointing, but the consumer sector remains well supported.”
Hard hit were categories like department stores and electronics. And the specter of inflation looms over the November numbers.
“Softer-than-expected retail activity in the face of rising prices will weigh on Q4 growth forecasts, but is unlikely to deter the Federal Reserve from moving forward with their plans to remove policy accommodation,” Baird wrote.
GlobalData’s Saunders notes the steep price increase in Thanksgiving meals this year, up by 13.4% based on GlobalData calculations, which drove sales growth at food and grocery stores.
Still shoppers are spending.
“From our consumer research, there is a sense that shoppers are postponing their worry about household finances until next year,” Saunders said.
“This, along with the continued benefit of higher savings and enhanced benefits, means that retail will end the year on a high note. However, it also signals that, come 2022, there could be a moderation in growth as bills come in and households look to balance their books.”
The National Retail Federation is forecasting a record holiday shopping season, with sales reaching between $843.4 billion and $859 billion.
The SPDR S&P Retail ETF
XRT,
has gained 36.6% for the year, the Consumer Discretionary Select Sector SPDR Fund
XLY,
is up 22%, and the benchmark S&P 500 index
SPX,
is up 23% for the period.
