Holiday tips in October retail sales

Consumers continued to spend in October, helping to increase retail sales up nearly 6% year-over-year in the segments covered by Retail Dive, according to a report from the U.S. Department of Commerce. Shoppers “put aside inflation concerns and many have started the holiday season,” the report said. pay attention to the numbers from the National Retail Federation.

Inflation actually showed some signs of easing last month, and that weighed on purchases of discretionary goods, according to Morning Consult.

“This is another good sign that the significant bumps in purchasing power we saw over the summer in Morning Consult’s Consumer Purchasing Power Barometer may be abating, which bodes well for the upcoming holiday shopping season,” said Scott Brave, Morning’s head of economic analysis. Consult. , the statement said.

Experts warn that many shoppers are turning to credit cards and their savings to top up their vacation budgets, and that’s not sustainable. But according to the NRF and others, their sustainability is also helped by continued high employment rates.

“With employment and wages rising, and shoppers accessing accumulated savings, we expect this trend to continue,” NRF Chief Economist Jack Kleinhenz said in a statement. “Early holiday offers that attracted customers appear to be behind the October numbers, and more promotions will be seen in November and December, which are historically the months of big holiday shopping.”

Black Friday is here just around the corner, though several retailers, including Amazon, Target and others, have held early sales in hopes of catching the attention of still-wary consumers. It didn’t actually produce much sales in October, as the healthy year-over-year growth represented a decline in volumes, according to GlobalData research.

“While the discount likely helped sales to some extent, it clearly did not act as a major stimulator for consumers,” GlobalData managing director Neil Saunders said in emailed comments. “If this pattern persists through the end of the holiday season, retailers may end up handing out large margins just to make a small profit. It will have a terrible effect on the results.’

Apparel sales rebounded for a while this year as events picked up and more people returned to the office, but sales in the segment rose just 2.5% in October, according to government data. The question remains whether the holidays will serve as another reason for a wardrobe update.

“After a lull in October, hopefully, consumers will pick up a bit as the holidays approach and look for event and occasion wear,” Saunders said. “Whether that comes true remains to be seen.”

Inflation distorts consumer behavior and confuses the numbers. The NRF expects retail sales to pick up somewhere in November and December 6% to 8% compared to last year. Insider Intelligence similarly expects total holiday retail sales to rise 7%, much slower than last year’s 15.4% increase, and Black Friday sales to grow closer to 4%.

“We expect holiday season sales to show strong growth by historical standards, although the increase will be driven almost entirely by inflation,” Andrew Lipsman, principal analyst at Insider Intelligence, said in a statement. “Many consumers will cut prices and be more responsive to discounts this holiday season, but overall consumer demand remains healthy despite negative headlines.”

The growing reliance on credit and savings to finance purchases and the propensity for heavy discounting are warning signs for the rest of the year and even into 2023. However, despite the clues found in retail sales in October, this holiday season remains a mystery.

“Overall, the solid numbers suggest that retail is coping relatively well in the more challenging environment. However, the cracks are starting to show, and they seem to be getting bigger, just as the sector enters its most critical trading period,” Saunders said. “We remain optimistic that the golden quarter will be a smart retail year in terms of sales, but it is clear that retailers will have to fight for every cent and are likely to make much less profit on what they manage to take “.