Behind the Numbers: Experts weigh in on November sales
Overall retail sales (includes gasoline stations and restaurants) fell 0.6% in November from October, reported the U.S. Census Bureau. Here's the reaction of some industry experts.
Naveen Jaggi, president retail advisory services, JLL:
“With retail sales up in September and October, consumers took advantage of promotions earlier in the holiday season and pulled back on spending in November. According to JLL’s 2022 Holiday Survey, more than half — 53.8% —of shoppers planned to start their shopping before Thanksgiving.”
“Last year, low inventory caused many consumers to finish their holiday shopping early to avoid shipping delays. This year, retail giants such as Target, Best Buy and Lowe’s have been busy the entire holiday season, placing inventory orders earlier than usual and investing in core items to help fill their stores as supply chain issues left many shelves empty in 2022, leaving consumers confident that they can finish holiday shopping last minute.”
“Although we saw a decline across most categories in November, spending increased in some areas including grocery stores (0.8%), health and personal care stores (0.7%), and food services and drinking places (0.9%). In addition, it’s important to note the year-over-year growth with gasoline stations (16.2%), miscellaneous store retailers (12.1%), retail and food services (6.5%), and food services and drinking places (14.1%).”
“In early November foot traffic was light, but Thanksgiving weekend saw solid in-store foot traffic. According to Placer.ai, shopping center foot traffic rose 1.7%, department stores rose 12.9% and apparel stores rose 2.2% month-over-month. Inflation continues to abate from year-over-year comparison and inched up a moderate 0.1% from October.
“We are expecting stores will be crowded and for December sales to rise from last minute shoppers.”
David Silverman, senior director, Fitch Ratings:
"November retail sales show a still-resilient consumer, although some signs of softening are emerging after several years of strong retail gains. With weaker results centered around categories like consumer electronics, home furnishings and apparel and strength in bars/restaurants, we believe results demonstrate some retail buying fatigue and budget shifts to consumer services.”
Consumer health remains generally robust, although the combination of recent home and equity price declines and high inflation has likely moderated sentiment somewhat from historically high levels. Promotional activity thus far this holiday season has been greater than last year given higher levels of inventory, and we expect a noisy promotional environment to continue through the remainder of the holidays and into early 2023 as retailers create calls to action for consumers.
Claire Tassin, retail & e-commerce analyst at Morning Consult:
“November's retail sales report reveals a consumer spending slowdown in nearly every category outside of grocery and food services. This shift is driven in part by dropping prices in key sectors like gas and auto, but also in the aggressive discounting by retailers as they pushed to move inventory and capture spending from price-sensitive shoppers.”
Kayla Bruun, economic analyst at Morning Consult:
“Retail sales fell in November, aligning with the decline in Morning Consult’s consumer spending data for the same month. Some of the decrease in nominal spending may be attributable to lower prices for certain goods as overstocked inventories put pressure on retailers to discount to move products.”
“However, household budgetary concerns are also likely playing a role as the continuing gap between inflation and income growth puts a strain on consumer purchasing power."
Chip West, retail and consumer behavior expert at Vericast:
“Consumers definitely cut back on retail spending in the midst of holiday shopping due to high prices and growing interest rates. After rising in 1.3% in October, November retail sales fell a little over half a percent month over month. This was a bit worse than expected by many economists and the biggest decline of the year.”
“This news illustrates that ongoing inflation, although slowly subsiding, has been taking its toll on the consumer. The pivot to essentials versus discretionary items is taking hold. November was likely also impacted by spiking energy costs (namely heating in colder climates).”
“Overall, as retailers close out this year and look ahead, promotional activity, especially leveraging influential media channels like print and digital, will remain significant because offers, deals and discounts will continue to attract these value seeking consumers. This will be elevated well into 2023 as inflation, interest rates, and higher prices will be the norm.”
“We also need to keep an eye on employment: if unemployment numbers rise, retailers will need to find new strategies and enhance old ones to connect with consumers who are really going to be feeling the stress of tighter budgets.”