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U.S. holiday retail sales fell short of the forecast for the season, according to the National Retail Federation.
Data released Wednesday by the NRF for sales in November and December showed the following:
- Holiday sales totaled $936.3 billion, representing 5.3% growth over 2021.
- The NRF had predicted 6-8% growth for the holidays.
- Ecommerce and nonstore sales for the season rose 9.5% to $261.6 billion. This also fell below the forecast of 10-12%.
- Retail sales for the full year of 2022 totaled $4.9 trillion, growing 7% over 2021.
The news came on the same day that the U.S. Commerce Department reported that total U.S. retail sales for December fell by 1.1% from the month before. It marked the second straight monthly decline, while year-over-year growth slowed to 6%.
On the holiday results, NRF leaders said the collision of elevated inflation and the Fed’s efforts to cool prices and demand by raising interest rates were drivers of the lower-than-expected growth. The comparison with 2021 was also tough, given that prior year saw record levels of growth at 13.5% amid unprecedented demand for goods. NRF CEO Matthew Shay called the results “respectable” in the economic environment.
“Consumers shopped in record numbers and retailers delivered positive holiday experiences to inflation-wary consumers, offering great products at more promotional price levels to fit their stretched budgets,” said Shay, in a statement. “The fact that we saw retail sales growth on top of December’s 14% gain in 2022 shows the resilience of consumers and the creativity of retailers in driving consumption and economic activity while addressing high inflation and continued cost pressures.”
(Source: National Retail Federation)
With consumers spending more on gas and food this year, discounts were a key driver of holiday sales throughout the season. Retailers offered deals beginning in October in an effort to deliver. The results of those fall events are outside these holiday totals.
“We knew it could be touch-and-go for final holiday sales given early shopping in October that likely pulled some sales forward plus price pressures and cold, stormy weather,” NRF Chief Economist Jack Kleinhenz said. “The pace of spending was choppy, and consumers may have pulled back more than we had hoped, but these numbers show that they navigated a challenging, inflation-driven environment reasonably well. The bottom line is that consumers are still engaged and shopping despite everything happening around them.”
In updates that held back full numbers, retailers have posted mixed results for the holidays so far. Macy’s talked of “lulls” during the weeks between Black Friday and Christmas. Abercrombie and American Eagle Outfitters said they had successful holidays. Lululemon warned that its profit would be lower than expected. More will be learned when retailers report earnings for the fourth quarter over the next two months.
NRF’s sales totals are not adjusted for inflation, and leave aside restaurants and auto categories to focus on core retail. Results in other categories include:
- Grocery and beverage stores were up 7.8%.
- General merchandise stores were up 3.8%.
- Sporting goods stores were up 3.5%.
- Health and personal care stores were up 2.8%.
- Clothing and clothing accessory stores were up 2.2%.
- Building materials and garden supply stores were up 1.5%.
- Furniture and home furnishings stores were down 1.1%.
- Electronics and appliance stores were down 5.7%.
Trending in Economy
Labor disputes on the West Coast could cause further disruption heading into peak season.
When the first half of 2023 is complete, imports are expected to dip 22% below last year.
That’s according to new data from the Global Port Tracker, which is compiled monthly by the National Retail Federation and Hackett Associates.
The decline has been building over the entire year, as imports dipped in the winter. With the spring, volume started to rebound. In April, the major ports handled 1.78 million Twenty-Foot Equivalent Units. That was an increase of 9.6% from March. Still it was a decline of 21.3% year over year – reflecting the record cargo hauled in over the spike in consumer demand of 2021 and the inventory glut 2022.
In 2023, consumer spending is remaining resilient with in a strong job market, despite the collision of inflation and interest rates. The economy remains different from pre-pandemic days, but shipping volumes are beginning to once again resemble the time before COVID-19.
“Economists and shipping lines increasingly wonder why the decline in container import demand is so much at odds with continuous growth in consumer demand,” said Hackett Associates Founder Ben Hackett, in a statement. “Import container shipments have returned the pre-pandemic levels seen in 2019 and appear likely to stay there for a while.”
Retailers and logistics professionals alike are looking to the second half of the year for a potential upswing. Peak shipping season occurs in the summer, which is in preparation for peak shopping season over the holidays.
Yet disruption could occur on the West Coast if labor issues can’t be settled. This week, ports from Los Angeles to Seattle reported closures and slowdowns as ongoing union disputes boil over, CNBC reported. NRF called on the Biden administration to intervene.
“Cargo volume is lower than last year but retailers are entering the busiest shipping season of the year bringing in holiday merchandise. The last thing retailers and other shippers need is ongoing disruption at the ports,” aid NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “If labor and management can’t reach agreement and operate smoothly and efficiently, retailers will have no choice but to continue to take their cargo to East Coast and Gulf Coast gateways. We continue to urge the administration to step in and help the parties reach an agreement and end the disruptions so operations can return to normal. We’ve had enough unavoidable supply chain issues the past two years. This is not the time for one that can be avoided.”