Finally, some good news for the nation’s retailers: Americans spent more than expected this holiday season, fueling the strongest growth in holiday retail sales since the end of the Great Recession
Holiday sales rose to $691.9 billion in November and December, marking a 5.5 percent increase from the year before, according to the National Retail Federation. The lobbying group had forecast holiday spending growth of 3.6 percent to 4 percent.
“Whether they shopped in-store, online or on their phones, consumers were in the mood to spend,” Matthew Shay, president and chief executive of the NRF, said in a statement.
Separately on Friday, the U.S. Commerce Department said retail sales grew 0.4 percent in December and 0.9 percent in November. Taken together, analysts said, that represented the best holiday spending performance since 2005.
“The basic story line here is that holiday sales were extremely strong,” said Chris Christopher, executive director of research firm IHS Markit. “Growth more than surpassed expectations, even though we’re seeing a structural shift in the industry as shoppers move online.”
Economists said a number of factors, including a growing economy and booming stock market, helped spur spending growth. The nation’s unemployment rate is at a 17-year low, and wages are inching up, giving consumers enough confidence to fill their carts, whether in stores or online. Online spending grew 11.5 percent during the holidays to $138.4 billion.
Holiday sales grew in every retail sector except sporting goods, according to the National Retail Federation. Sales of building materials and supplies grew 8.1 percent from 2016, while furniture rose 7.5 percent and electronics grew 6.7 percent. Sales of clothing and accessories were up 2.7 percent.
“The market conditions were right, retailers were doing what they know how to do, and it all worked,” Jack Kleinhenz, the NRF’s chief economist, said in a statement. “The economy was in great shape going into the holiday season, and retailers had the right mix of inventory, pricing and staffing to help them connect with shoppers very efficiently.”
Many retailers say they saw a bump in sales during the important holiday season. Kohl’s reported a 6.9 percent increase in holiday sales at stores open at least one year, while sales rose 3.4 percent at both Target and J.C. Penney.
Macy’s reported 1.1 percent growth in same-store sales during that period, led by increased demand for active apparel, shoes, dresses and coats. “Consumers were ready to spend this season,” Jeff Gennette, Macy’s chief executive, said in a statement. “We saw improved sales trends in our stores and continued to see double-digit growth on our digital platforms.”
For decades, the holiday season has been a critical time for the nation’s retailers, and analysts said that was particularly true in 2017. Retailers closed a record 7,000 U.S. stores last year, while dozens of big-name companies, including Gymboree, RadioShack and BCBG Max Azria, filed for bankruptcy.
Some say last season’s success could be a turning point for the industry. “We think the willingness to spend and growing purchasing power seen during the holidays will be key drivers of the 2018 economy,” Kleinhenz said.
The season got off to a strong start, with roughly 70 percent of Americans reporting that they went shopping — either online or in person — over Thanksgiving weekend. That momentum continued into Cyber Monday — the first day back at work for many Americans after Thanksgiving — when consumers spent a record $6.59 billion online, making it the largest Internet shopping day in history, according to data from Adobe Analytics.
Wall Street seemed pleased by the numbers: Shares of Kohl’s stock jumped 4.5 percent by closing bell Friday, while shares of Nordstrom, Target and Dollar Tree rose more than 3 percent. Macy’s closed up 2.2 percent.