NRF Report: Retailers Set Record Holiday Sales, Above Estimate
U.S. retail sales for the holiday season came out better than expected, increasing 14.1 percent, according to the National Retail Federation.
The NRF said Friday that the results beat its own forecast for the season, and transcended a cluster of headwinds, from COVID-19 to supply chain bottlenecks, inventory shortages, labor shortages, and inflation which works both ways for retailers. It does deter some spending while also lifting the retail dollar tally.
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Strong consumer demand, rising wages, low unemployment, as well as the record inflation rate, lifted the retail sales figure for the season. Gains were biggest at clothing and clothing accessory stores, which were up 33.1 percent. The sporting goods category showed the second highest gains, at 20.9 percent, while general merchandise came in third with a 15.2 percent gain, according to the NRF.
While NRF’s report was upbeat, the trade organization warned that retailers will continue to face challenges in 2022, specifically citing the pandemic. Spiking Covid cases is discouraging shopping in the stores, causing labor shortages and slowing the supply chain causing some inventory shortages.
During the holiday season, defined by the NRF as the Nov. 1 to Dec. 31 period, sales hit $886.7 billion, easily beating the organization’s forecast and setting a new record.
In the 2020 holiday season, U.S. consumers spent $777.3 billion spent, representing 8.2 percent growth over the 2019 season. The 2021 growth compares with an average of 4.4 percent holiday sales growth over the previous five years.
The number includes online and other nonstore sales, which were up 11.3 percent at $218.9 billion. The numbers exclude automobile dealers, gasoline stations and restaurants to focus on core retail.
“We closed out the year with outstanding annual retail sales and a record holiday season, which is a clear testament to the power of the consumer and the ingenuity of retailers and their workers,” NRF president and chief executive officer Matthew Shay said in a statement. “Despite supply chain problems, rising inflation, labor shortages and the Omicron variant, retailers delivered a positive holiday experience to pandemic-fatigued consumers and their families. Consumers were backed by strong wages and record savings and began their shopping earlier this year than ever before. This is, in part, why we saw a decline in sales from November to December.
“NRF expects further growth for 2022, and we will continue to focus on industry challenges presented by COVID-19, the supply chain, labor force issues and persistent inflation,” said Shay. “The numbers are clear: 2021 was an undeniably outstanding year for retail sales.”
“Retail sales displayed solid momentum throughout the holiday season,” added NRF chief economist Jack Kleinhenz in a statement. “Worries about inflation and COVID-19 put pressure on consumer attitudes, but did not dampen spending, and sales were remarkably strong. Even though many consumers began shopping in October, this was the strongest November and December we’ve ever seen. Despite supply chain challenges, retailers kept their shelves stocked and consumers were able to fill their carts both in-store and online. Holiday spending during 2021 reflected continued consumer demand that is driving the economy and should continue in 2022.
“Nonetheless, we should be prepared for challenges in the coming months due to the substantial uncertainty brought by the pandemic.”
Back in October, the NRF predicted that 2021 holiday sales would increase between 8.5 and 10.5 percent over 2020 to between $843.4 billion and $859 billion. But in December, the NRF revised its forecast to as much as 11.5 percent growth.
Online spending met NRF’s forecast, which called for growth of between 11 and 15 percent to between $218.3 billion and $226.2 billion.
NRF’s holiday total includes sales for Nov. 1 through Dec. 31. Retail sales as defined by NRF, which exclude automobile dealers, gasoline stations and restaurants, were down 2.7 percent seasonally adjusted in December from November, but up 13.4 percent unadjusted year-over-year. That compared with a 0.3 percent month-over-month decrease in November, which was up 14.8 percent year-over-year. As of December, sales were up 13 percent unadjusted year-over-year on a three-month moving average.
NRF’s numbers are based on data from the U.S. Census Bureau, which said Friday that overall retail sales in December — including autos, gas and restaurants — were down 1.9 percent seasonally adjusted from November but up 16.9 percent year-over-year. That compares with increases of 0.2 percent month-over-month and 18.2 percent year-over-year in November. Despite occasional month-over-month declines, sales have grown year-over-year every month since June 2020, according to Census data.
Meanwhile, retail consultancy Customer Growth Partners reported holiday sales slightly below the NRF statistics. The retail consulting firm said despite Omicron-depressed traffic in late December, U.S. retailers recorded all-time record growth of 13.7 percent, year-one-year, for the 2021 Holiday season.
Holiday sales reached $859 billion for the November-December season ( NRF reported $886.7 billion) up from $755 billion last year. However, over half of the overall sales growth was driven by the current 7 percent consumer price inflation, the highest in 40 years, while organic (inflation-adjusted) growth accounted for 6.7 percent of the increase, CGP indicated.
“The organic growth of 6.7 percent was the strongest seen this century, just outpacing last year’s inflation-adjusted growth of 6.6 percent,” said CGP president Craig Johnson. “This is a strong sign of a healthy retail economy—and a vote of confidence in the American consumer—showing that she is still out shopping, despite Covid, inflation and supply chain-triggered merchandise stock-outs.”
CGP utilizes data from all retail sectors, including online sales, drawing on the Census Department’s monthly retail survey which excludes automobiles, auto parts, gasoline, oil and restaurants. Inflation data is based on the Department of Labor, Bureau of Labor Statistics Consumer Price Index data.
CGP said apparel, after years of sluggish sales, topped retail sales growth with an exceptional increase of 33.1 percent. Only about 5.8 percent of this growth was supplied by inflation in the category, which is a relatively small sector with an 8 percent share-of-wallet. However, food and beverages, the largest sector with 19 percent of total retail spending, saw inflation comprise 6.5 percent points of its total growth of 8.6 percent. Consumer electronics, long a deflationary and low margin category, as expected showed the least inflationary impact, only about 1.5 percent points out of its total increase of 13.8 percent from last year
Johnson said inflation and supply chain woes may get worse before better. “Based on what our nationwide team is finding in our field research—across 50 major retailers and over 100 benchmark mall and off-mall venues—inflation is running over 8 percent January to date. Wages are now rising about 4.7 percent, year over year, far lagging inflation rates, indicating that absent corrective action, many households will be unable to keep up their current pace of spending going forward. American consumers may well be resilient, but they are not infinitely resilient.”
NRF’s statistics showed:
• Sporting goods stores, up 20.9 percent.
• General merchandise stores, up 15.2 percent.
• Furniture and home furnishings stores, up 15 percent.
• Electronics and appliance stores, up 13.8 percent.
• Building materials and garden supply stores, up 13.5 percent.
• Online and other nonstore sales, up 11.3 percent.
• Health and personal care stores, up 9.6 percent.
• Grocery and beverage stores, up 8.6 percent.
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