Robust Retail Sales Lift Merchants' Holiday Spirits

Before you go, we thought you'd like these...
Retail sales rose 7.7% in NovemberThe holiday shopping season is off to an even better-than-expected start, according to new sales figures from the federal government.

The Commerce Department's retail and food services sales tally for November rose to $378.7 billion, up 7.7% from November 2009 and up 0.8% from October. Excluding auto sales, totals were up 6.7% from the year-ago month, and retail sales alone were up 8.1%. With this latest boost, year-to-date sales are up 7.7% over last year's first 11 months, supporting retailers' recent view that the recession is finally losing its hold on shoppers.

While some segments showed a drop from October -- including car dealers (-1%) electronics (-0.6%) and furniture stores (-0.5%) -- all retail segments showed strong increases year-over-year, despite being compared to healthy sales in November 2009. Auto sales likely suffered from the comparison to September and October, when the start of the new model year typically boosts totals, while electronics sales continue to suffer from dropping prices for large-screen TVs and other big-ticket items.

Big Chains Beat Forecasts

Holiday gift-shopping lifted several categories, including hobby, book and music stores (up 12.3% year-over-year) and apparel (up 7.5%). Both segments were also up noticeably from the month before, 2.3% and 2.7%, respectively.

The increases were not totally unexpected because major retailers had already reported strong sales over the Thanksgiving weekend -- spurred in large part by stores that started Black Friday sales earlier than usual. Still, the top national chains reported nearly 6% growth, better than the 3% to 4% analysts had forecast.

The Commerce Department's tally is the most complete picture of retail sales because it includes gas, food and auto sales, as well as results for Walmart (WMT), the world's largest retailer, which doesn't publicly report monthly sales.

A Strong Start for December

"The November performance was strong across most segments and was helped by a confluence of factors, including easy comparisons (back-to-back November declines in 2008 and 2009), colder-than-normal weather, early promotions, aggressive post-Thanksgiving marketing and a recovering economy," said a report from Michael Niemira chief economist of the International Council of Shopping Centers

And December is off to the good early start, according to the ICSC's weekly tally, which found sales rose 3.1% last week over the same time last year and 0.8% over the previous week.

"That is a rather impressive increase over the past two weeks, but consumers are still a tad below last year's pace and noticeably below two years ago, which suggests a stronger late-buying rush over the next two weeks," Niemira noted. Based on the strong performance in November and the momentum so far in December, he revised his holiday season forecast up by half a percentage point, calling for growth of 3.5% to 4% above last year, the strongest since 2006.

"Shopping Smartly"


Indeed, three holidays into this economic downturn, retailers are facing the fourth quarter with more of a sense that consumers have begun spending again, however cautiously.

Sponsored Links
"The consumer is shopping, she is shopping smartly and looking for good value on good product," says David Friedman, marketing president at Sears Holding (SHLD). "We are cautiously optimistic."

The parent of Sears and Kmart is seeing a pickup in jewelry -- an encouraging sign that nonessentials are selling -- as well as electronics, home appliances and other large-ticket items, Friedman says.

"I think she's sort of found the new normal," he says, "and is now interested in moving forward from that place." Moving forward is something retailers have been waiting to do for quite a while.
Read Full Story

People are Reading