Retail Sales Decline 0.6% in November
Consumers pulled back on spending in November, failing to keep up with even a muted level of inflation for the month, the Commerce Department reported Thursday. Retail sales for the month declined 0.6 percent, even worse than the Dow Jones estimate for a 0.3 percent drop. Measures that exclude autos and both autos and gas sales both showed 0.2 percent declines. Online sales also decreased, falling 0.9 percent. On a year-over-year basis, retail sales increased 6.5 percent, compared with a CPI inflation rate of 7.1 percent.
Total Retail's Take: For analysis of what this data means for the retail sector as well as what to expect for the rest of the holiday shopping season, Total Retail received the following comments from leading industry analysts:
"November's retail sales report reveals a consumer spending slowdown in nearly every category outside of grocery and food services," notes Morning Consult's retail and e-commerce analyst Claire Tassin. "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."
Tassin's co-worker, Kayla Bruun, economic analyst at Morning Consult, offered the following insight: "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."
Naveen Jaggi, president, retail advisory services, JLL, provided his reaction to November's retail sales: "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 percent) 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. As we enter the last few weeks of holiday shopping, we're expecting stores will be crowded and for December sales to rise from last-minute shoppers."
