Spurred by online purchases, holiday retail sales grew 4.1%

by Kim Souza ([email protected]) 225 views 

By most accounts, the holiday season of 2019 was bright as overall sales grew 4.1% to $730.2 billion, according to the National Retail Federation (NRF). Sales exclude automotive dealers, gasoline and restaurants. Online sales in the period rose 14.6% from the prior year to $167.8 billion. Online sales make up 22.9% of the total holiday sales in 2019.

“Having spent the last week with top retail leaders from around the world at our annual convention, and spending time at the White House [Wednesday] with government policymakers and economists, these numbers validate continued optimism for increased investment and opportunity in the retail industry,” NRF president and CEO Matthew Shay said. “This is a consumer-driven economy, and by any measure, the consumer has put the economy in a solid position for continued growth. This is a strong finish to the holiday season, and we think it’s a positive indicator of what’s ahead.”

In October, the trade group forecast holiday sales during November and December to increase between 3.8% and 4.2% for a total of roughly $730 billion. Online sales were forecast to be up around 14%, but far exceeded that prediction.

NRF said it is happy with the growth over 2018, which was somewhat hindered by the government shutdown and stock market volatility.

“This was a healthy holiday season, especially compared with the decline in retail sales we saw at the end of the season in 2018,” NRF chief economist Jack Kleinhenz said. “Despite a late Thanksgiving and worries about tariffs, the consumer didn’t go away. We’ve had months of strong employment numbers, high wages and strong household balance sheets. There’s no doubt that gave consumers a sense of confidence about their ability to spend, and they did their part to keep the economy moving.”

Retail sales in December 2019 alone increased 0.5% seasonally adjusted over November and were up 6.7% unadjusted year-over-year.

December’s results follow November’s decline of 0.1% month-over-month an increase of 1.3% year-over-year. As of December, the three-month moving average was up 4.1% over the same period a year ago, compared with 3.1% in November.

Kleinhenz said the modest growth in November and the large increase in December came partly because two key days of the Thanksgiving shopping weekend – the Sunday and also Cyber Monday – fell in December this year.

Despite the rosy overall results, Target reported weaker than expected holiday sales missed the retailer’s estimates. Target said comparable sales rose 1.4% in November and December, down from 5.7% a year ago.

Comparable digital sales increased 19% during the holiday shopping season, driven primarily by the company’s same-day fulfillment services (Order Pick Up, Drive Up and Shipt), which together grew more than 50% from the comparable period last year.

“Continued strength in multiple core categories such as apparel, beauty and food and beverages was offset by softer-than-expected performance in key holiday categories, including electronics, toys and portions of its home business, which together account for approximately one-third of the company’s holiday season sales,” Target CEO Brian Cornell said in the release.

“We faced challenges throughout November and December in key seasonal merchandise categories and our holiday sales did not meet our expectations. Because these categories account for a much higher portion of sales during the holidays, they have a larger impact on our overall sales growth as compared to the rest of the year.”

Target reported apparel sales up 5%, while beauty sales rose 6%. Home sales were down 1% and toys and electronic sales were flat. Food and beverage sales rose 3% in the period.

Despite the holiday miss, Wall Street analyst Neil Saunders of GlobalData Retail said Target remains on the right path. Cornell did not guide down for the fourth quarter earnings saying results will likely benefit from a stronger-than-expected push in higher-margin goods over the holiday.

The National Retail Federation reports varying category results for the holiday period from 2018 to 2019:

  • Online and other non-store sales were up 14.6%
  • Grocery and beverage stores were up 2.9%
  • Furniture and home furnishings stores were up 2.6%
  • Health and personal care stores were up 1.6%
  • Building materials and garden supply stores were up 1%
  • General merchandise stores were up 0.4%
  • Sporting goods stores were down 0.4%
  • Clothing and clothing accessory stores were down 1.6%
  • Electronics and appliance stores were down 2%
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