Retailers pray for one more week this holiday season as consumer buying habits have been slowly changing. The late Thanksgiving reduced the holiday shopping season by six days, compared to last year.
Holiday retail sales have softened, dropping from a projected annual increase of 4% to a potential 2%. Even though the economy appears solid, Americans are not buying it, as consumer confidence has been sliding for four consecutive months.
Driven by the threat of trade tariff-driven price hikes Americans started holiday shopping earlier than usual this year. Online sales soared as retailers offered deep “Black Friday” and “Cyber Monday” price cuts. Now, the post season may see a record number of returned purchases.
Earlier, Americans indicated they would spend an average of $1,047.83 this holiday season, up 4% from the $1,007.24 they said they would spend last year. Shoppers between the ages of 35 and 44 plan to spend the most at $1,158.63, according to the annual survey by the National Retail Federation (NRF).
The NRF noted consumers began their shopping early this year, with some starting before November. NRF surveys showed that 39% planned to begin by Halloween, and that consumers on average had completed 52% of their shopping as of the Thanksgiving Day weekend.
Nonetheless, NRF’s forecast predicts that holiday retail sales during November and December will increase between 3.8% and 4.2% for a total of between $727.9 billion and $730.7 billion.
2019 Holiday Data
The U.S. Department of Commerce reported last week retail sales, excluding cars and gasoline, were unchanged (0.2%) from the previous month. November sales declined sharply across categories that are closely tied with holiday gift-giving, including clothing, department stores and sporting goods. Spending at bars and restaurants dropped 0.3% last month, the steepest monthly decline since last December.
The NRF recently reported retail sales in November increased 0.1% seasonally adjusted over October and were up 2.1% unadjusted year-over-year, marking the first half of the holiday season with billions of dollars in shopping left to be done.
The November Conference Board Consumer Confidence Index decreased for four straight months. The November Index now stands at 125.5, down from 126.1 in October. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – decreased from 173.5 to 166.9.
To make matters worse for retailers a recent Oracle report found 77% of consumers anticipate returning some of the gifts they would receive. Twenty percent of those plan to return at least half of the gifts they receive.
Additionally, there are early indications global consumer credit card usage will continue its downward growth trend in the fourth quarter says Robert McKinley, Senior Analyst for CardTrak and CardFlash.
On a quarterly basis, U. S. consumer revolving credit increased a revised 3.6% YOY in the third-quarter, compared to a revised 5.2% YOY in the second-quarter, and a revised 3.4% in the third-quarter of last year, according to the Federal Reserve.
The NRF found consumers will spend in three main categories during the holidays – gifts for family, friends and co-workers, at an average $658.55; non-gift holiday items such as candy and food, decorations, greeting cards and flowers at $227.26; and other non-gift purchases that take advantage of the deals and promotions throughout the season at $162.02.