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The holiday shopping season is fast approaching, and new data signals that the American consumer still has momentum going into the fourth quarter.
US retail sales increased a better-than-forecast 0.7% in September, according to the latest Census Bureau numbers, which is the sixth straight month of gains. While the inflation-adjusted increase was just 0.3%, some economists are still optimistic.
“The stronger-than-forecast rise in retail sales in September and upward revisions to the prior two months indicate that consumers maintain a buoyant pace of spending as employment and income growth remain sturdy,” Nationwide Chief Economist Kathy Bostjancic wrote in a research brief emailed to Retail Brew.
Several major retail categories, however, had lower sales or stayed flat in September:
- Electronics and appliance store sales dropped 0.8%.
- Clothing sales fell 0.8%.
- Building materials and gardening supplies fell 0.2%.
- And sales at sporting goods, furniture, and department stores saw zero gains.
Bolstering the headline number was a 1.1% bump in nonstore sales (i.e., online sales) and increases in the sale of essential items such as groceries and gasoline.
If this dynamic continues into the holidays, it could spell trouble for retailers peddling big-ticket discretionary items, but a new forecast from Deloitte predicted that shoppers won’t hold back this year despite expectations of higher prices.
Shopping like it’s 2019: The consulting firm’s 2023 holiday retail survey estimated that the average person’s spend on gifts will rise 14% year over year, to $1,652. It also expects holiday participation rates to return to the pre-pandemic level of 95%, up from 92% in 2022.
Three-quarters of more than 4,300 consumers surveyed expect higher prices than last year, and two-thirds plan to shop on Black Friday and Cyber Monday, putting more pressure on retailers to perform well during those sales events.
The report also found that consumers plan to wrap up their holiday shopping within 5.8 weeks, down from 7.4 weeks before the pandemic.
“With customers planning to shop fewer weeks, retailers have a shorter amount of time to gain consumers’ attention, highlighting the importance of the November promotional events this holiday season,” Deloitte principal Brian McCarthy said in a statement.