Retailers Boosted Their October Sales At The Expense Of Their November Results

Deep discounting boosted retail sales in October, but retailers paid a price for that, with weaker than expected results in November.

The U.S. Census Bureau reported Thursday that retail sales were down 0.6% in November compared to October, despite strong store traffic and online spending over the Black Friday through Cyber Monday period.

It was the biggest monthly drop in retail sales since December 2021.

In October, retailers eager to clear excess inventory caused by earlier supply chain backlogs offered Black Friday-level discounts a month earlier than usual. That discounting convinced enough shoppers to buy to boost October sales by an unexpectedly strong 1.3%, unrevised.

AmazonAMZN
held what amounted to a second Prime Day event in October, a “Prime Early Access Sale” on October 11-12. WalmartWMT
, TargetTGT
, and numerous other retailers joined in with their competing deals in October.

The National Retail Federation was quick to note that on a year-over-year basis, November’s sales still show healthy growth, up 6.5% compared to November, 2021. That level of growth is impressive, the NRF notes, given that it comes on top of the dramatic sales growth of the pandemic years.

The NRF, and many retailers, are also expecting December will be stronger this year than in 2021, when consumers shopped earlier due to supply chain worries. Consumers, they say, are signaling they plan to do more in-store shopping this year, as well as more last-minute shopping.

“Consumers have been shifting back to in-store shopping for a more traditional holiday shopping experience, and we expect record participation for this year’s Super Saturday shopping weekend,” NRF President and CEO Matthew Shay said. Super Saturday – the last Saturday before Christmas Eve and Christmas, falls on Dec. 17 this year. It typically has been one of the biggest days of the year for store traffic and in-store spending.

The NRF expects holiday sales during November and December to grow by 6-8% this year, and says the season is still on track to hit that forecast.

Electronics and home furnishings had the biggest spending drops in November. Electronics was down 1.5% monthly and 4.4% on an annual basis, and home furnishings were down 2.6% monthly and 3.2% year-over-year.

November faced a tough monthly comparison after the strong jump in sales in October, but the results still show that “the consumer remains surprisingly resilient,” NRF Chief Economist Jack Kleinhenz said.

“The healthy year-over-year comparison is more important” than the monthly drop, Kleinhenz said, “and clearly shows that the economy is not in a recession.”

Other economists and analysts agreed with Kleinhenz’s assertion that the year-over-year growth is more important than the monthly drop. But some expressed concern that the weaker than expected monthly comparison was a sign Americans are worrying about inflation as they do their holiday shopping.

Wall Street also saw the November retail numbers as reason to worry. The Dow closed down nearly 800 points today, with other stock indexes down as well.