Retail sales were up 1.3% for October (seasonally adjusted) from September, indicating that consumers continue to spend despite rising prices. Many retailers, including Walmart, Amazon and Target, started early holiday sales in October, giving shoppers access to great deals early in the season. Year over year, sales were up 8.3% compared to the same period in 2021. The total sales from August through October were up 8.9%. Gasoline sales were up 17.8%, restaurants were up 14.1%, and retail trade was up 7.5% compared to last year, according to the U.S. Census Bureau’s latest release.
Rising prices have not deterred spending by consumers
The Consumer Price Index for the rolling six months through October was up 7.7%, the smallest increase since January of this year. Categories that have most impacted retail trade are energy pricing, up 17.6% (primarily driven by fuel which is 69% more costly than last year) and food pricing, which is up 11%. Some categories of discretionary spending that most impact holiday gift-giving showed a decrease in pricing (which is positive for consumers), such as computer prices down 3.1% versus last October, smartphone prices down 23% and televisions down 16.5%. Other holiday categories with higher pricing include general apparel, up 4.1% (with women’s apparel up 6.3%) and jewelry (including watches), up 2.5%. Inflationary pricing weighs on consumers as they look for deals and good value this holiday season. Some consumers stated they would buy fewer gifts this year based on financial concerns.
Shoppers will return to stores
Experts agree that shoppers will return to physical stores this year. People are primed to go all out to celebrate the holidays, with 55% of consumers saying they are excited about holiday shopping, according to the McKinsey U.S. Holiday Shopping Survey. Concerns about inflationary pressures, especially in the non-discretionary spending categories, have consumers shopping earlier and being more surgical about purchasing. The survey revealed that 56% of shoppers had already started shopping in October. Many shoppers are looking for value and the best pricing this holiday season, with nearly half of US survey respondents saying they would switch stores if they found a better price elsewhere.
Consumer behavior shows signs of a positive shopping season
While 37% of American households say their financial situation is worse than last year, according to the 2022 Deloitte Holiday Retail Survey, the holiday spirit is strong as consumers anticipate a return to socialization. This year may be the first since the pandemic that resembles a return to normal as people look to participate in holiday gatherings. The survey showed that consumers are making celebrating a priority. Low-income shoppers who pulled back spending last year plan to spend 25% more this year on holiday purchases.
Holiday sales projection
The holiday season for sales started in October and will continue to run through the end of December. The National Retail Federation (NRF) anticipates holiday sales to increase by 6 to 8% over November and December last year. The projection excludes autos, gasoline, and restaurants. The NRF predicts online and non-store sales to grow between 10 to 12%. “While consumers are feeling the pressure of inflation and higher prices, and while there is continued stratification with consumer spending and behavior among households at different income levels, consumers remain resilient and continue to engage in commerce,” NRF President and CEO Matthew Shay said. “In the face of these challenges, many households will supplement spending with savings and credit to provide a cushion and result in a positive holiday season.”