November saw a decline in retail sales. People are shopping less for traditional gift categories such as clothing and sports goods, which is an indication that food prices are increasing.
U.S. retail sales dropped 0.6 percent in October from November, the Department of Commerce stated Thursday. This number does not take into account price changes. However, inflation did moderately ease during the month.
There were some areas where spending rose, including in grocery stores and at health and personal-care stores as well as restaurants and bars. Motor vehicles, furniture and consumer electronics all fell, while clothing and sporting items also declined. Consumers spent less money filling up cars with gas during the month as well, because gas prices fell.
November inflation slowed down to 7.1% from 7.7% in Oct. Some analysts suggested that retail sales numbers were due to lower prices.
David Silverman, a senior Fitch Ratings director, said “Less inflation is driving some of that decline from October to November, which wouldn't be a bad thing,”
In many ways, this report shows how inflation, even though it has decreased, has changed the consumer's approach to the holiday season. KPMG data suggests that Americans are reducing the number of people who they give gifts to.
Matt Kramer of KPMG's national consumer and retail sector leader said that “Those are some signs that those core categories are just taking quite a bit of our budget away and we can only do so much during the holiday season.”
Grocery store sales increased by 0.8% over the prior month. Health and personal care retailers saw an increase of 0.7%in sales. Restaurants, bars and clubs saw a 0.9% rise. The sales at gas stations dropped by 0.1%, and motor vehicle parts and automobile dealers saw a decline of 2.3%.
November marked the official launch of the holiday shopping period. Nearly 200 million Americans bought holiday gifts during the Thanksgiving weekend. According to the group's estimates, shoppers spent an average of $325 that weekend, which is up 8 percent from last.
But in reality, however, the holiday shopping season began years before Black Friday. In order to increase sales and encourage shoppers to spend earlier in the year, retailers have increased their discounts over recent months. It was calculated that retailers could avoid consumer concerns about possible recession by making early holiday sales.
According to Salesforce.com, the average sales discount Black Friday deals received was 30 percent. This was slightly lower than the average discount rate for 2021 of 29.9%.
Many experts believe the earlier-than-usual deals were reflected on the October retail sales figures. These sales rose by 1.3 percentage points from September.
The pandemic has caused shoppers to feel shopping fatigue. They may have spent money on many different items in the past. Silverman explained that retailers now face difficult sales comparisons after two consecutive years of large spending and holiday shopping season. Retail sales increased 6.5% in November despite the month's decline, compared to the year before.
Silverman stated, “I prefer the full dynamics of a season,” further stating “I think that gifting can take the form tickets to something. It could also include gift cards. Until they are used, those don't count toward retail sales. Those dynamics do come into play as well.”
Americans have experienced high levels of inflation for most of the year. It is expected that this will be the key factor in the holiday shopping season. Many of those same patterns as in November, such shoppers' concerns over the economy, will likely persist in the final weeks.
It is unclear what December's market will look like. Because retailers offered sales to induce shoppers to buy holiday merchandise while others were still selling Halloween merchandise, this may make it less attractive for consumers to spend during the weeks before Christmas.
Retail executives indicated that they had noticed this trend and were ready to offer additional discounts as the holiday nears.
Silverman said, “We think that individual companies execution has become more essential as retails slow down somewhat.”
According to N.R.F, holiday retail sales in November and December would increase by 6-8 percent, compared to last.
Mr. Kramer stated, “I think it's still going to be a solid year,” stating further “I do think the consumers will be out but there's only so much budget to go around and there won't be these huge jumps like we saw last year.”