Holiday season was good to retailers
Americans spent more than expected and most since 2005, analysts say
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.