CPG: ‘Big six’ retailers up 18.5% combined, pointing to record holiday sales

Customer Growth Partners has updated its holiday forecast to a 5.8% year-over-year growth, to a record $749 billion.

“After the COVID store closures crushed sales by 12% in April, traffic and sales have rebounded ever since, culminating in the most recent actual data from the six mega-retailers that account for almost 30% of all U.S. retail sales,” said CGP president Craig Johnson. (The CPG forecast spans all retail sales except autos, gasoline and restaurants.)

According to Johnson, the steep 18.5% jump in combined third-quarter sales of Amazon, Costco, Home Depot, Lowe’s, Target and Walmart shows that consumers are out and buying in a way they haven’t been in over a year. 

“The delayed back-to-school season did see a slight speed bump in August, when sales growth eased to ‘only’ 6.9%,” he added. “But shoppers ramped up sharply ever since, sending both the Big Six retailers to record results.

Johnson noted that many other retailers reporting are also seeing strong third quarter and early fourth-quarter results, with the exception of the still-ailing apparel and department store sectors.

“Unlike some past retail sales peaks, this year’s predicted 5.8% holiday growth is grounded on solid consumer fundamentals,” Johnson said, including robust 5.4% growth in disposable personal income, bolstered by rising wages and salaries, and the nearly 12 million new jobs created since the April nadir of the COVID recession.

“Consumer financials are the healthiest in years, with the Fed’s Household Debt Service ratio at a record-low 8.7%, and personal savings rates above 14%, more than twice usual levels,” Johnson said.

CPG’s upbeat holiday outlook is tempered by concerns for the millions still unemployed, and by uncertainty as to new Federal COVID-related aid before 2021.  

“Looking past holiday, the key question is how sustainable the growth will be going forward, given the remarkable strength of household finances—and the uncertain pace of COVID, particularly on employment growth,” Johnson said. “But if the economy can generate at least the current monthly rate of 660,000 new jobs—retail spending is poised to expand in 2021 at about a healthy 5%-plus pace.”