Hol­i­day sea­son was good to re­tail­ers

Amer­i­cans spent more than ex­pected and most since 2005, an­a­lysts say

The Washington Post - - ECONOMY & BUSINESS - BY ABHA BHATTARAI abha.bhattarai@wash­post.com

Fi­nally, some good news for the na­tion’s re­tail­ers: Amer­i­cans spent more than ex­pected this hol­i­day sea­son, fu­el­ing the strong­est growth in hol­i­day re­tail sales since the end of the Great Re­ces­sion

Hol­i­day sales rose to $691.9 bil­lion in Novem­ber and De­cem­ber, mark­ing a 5.5 per­cent in­crease from the year be­fore, ac­cord­ing to the Na­tional Re­tail Fed­er­a­tion. The lob­by­ing group had fore­cast hol­i­day spend­ing growth of 3.6 to 4 per­cent.

“Whether they shopped in­store, on­line or on their phones, con­sumers were in the mood to spend,” Matthew Shay, pres­i­dent and chief ex­ec­u­tive of the NRF, said in a state­ment.

Sep­a­rately on Fri­day, the Com­merce De­part­ment said re­tail sales grew 0.4 per­cent in De­cem­ber and 0.9 per­cent in Novem­ber. Taken to­gether, an­a­lysts said, that rep­re­sented the best hol­i­day spend­ing per­for­mance since 2005.

“The ba­sic story line here is that hol­i­day sales were ex­tremely strong,” said Chris Christo­pher, ex­ec­u­tive di­rec­tor of re­search firm IHS Markit. “Growth more than sur­passed ex­pec­ta­tions, even though we’re see­ing a struc­tural shift in the in­dus­try as shop­pers move on­line.”

Econ­o­mists said fac­tors in­clud­ing a grow­ing econ­omy and boom­ing stock mar­ket helped spur spend­ing growth. The na­tion’s un­em­ploy­ment rate is at a 17-year low, and wages are inch­ing up, giv­ing con­sumers enough con­fi­dence to fill their carts, whether in stores or on­line. On­line spend­ing grew 11.5 per­cent dur­ing the hol­i­days to $138.4 bil­lion.

Hol­i­day sales grew in ev­ery re­tail sec­tor ex­cept sport­ing goods, ac­cord­ing to the NRF. Sales of build­ing ma­te­ri­als and sup­plies grew 8.1 per­cent from 2016, while fur­ni­ture rose 7.5 per­cent and elec­tron­ics grew 6.7 per­cent. Sales of cloth­ing and ac­ces­sories were up 2.7 per­cent.

“The econ­omy was in great shape go­ing into the hol­i­day sea­son, and re­tail­ers had the right mix of in­ven­tory, pric­ing and staffing to help them con­nect with shop­pers very ef­fi­ciently,” Jack Klein­henz, the NRF’s chief econ­o­mist, said in a state­ment.

Kohl’s re­ported a 6.9 per­cent in­crease in hol­i­day sales at stores open at least one year, while sales rose 3.4 per­cent at Tar­get and J.C. Pen­ney.

Macy’s re­ported 1.1 per­cent growth in same-store sales dur­ing that pe­riod, led by in­creased de­mand for ac­tive ap­parel, shoes, dresses and coats. “Con­sumers were ready to spend this sea­son,” Jeff Gen­nette, Macy’s chief ex­ec­u­tive, said in a state­ment. “We saw im­proved sales trends in our stores and con­tin­ued to see dou­ble-digit growth on our dig­i­tal plat­forms.”

For decades, the hol­i­day sea­son has been a crit­i­cal time for the na­tion’s re­tail­ers, and an­a­lysts said that was par­tic­u­larly true in 2017. Re­tail­ers closed a record 7,000 U.S. stores last year, while dozens of big-name com­pa­nies, in­clud­ing Gym­boree, Ra­dio Shack and BCBG Max Azria, filed for bank­ruptcy.

Some say the sea­son’s suc­cess could be a turn­ing point for the in­dus­try. “We think the will­ing­ness to spend and grow­ing pur­chas­ing power seen dur­ing the hol­i­days will be key driv­ers of the 2018 econ­omy,” Klein­henz said.

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