November 2011 retail sales are 0.2 percent better than October, says Department of Commerce
November retail sales were up for the sixth straight month, according to data released today by the United States Department of Commerce.
Despite the relatively slight gains, retail sales in November were up for the sixth straight month, according to data released today by the United States Department of Commerce.
Commerce reported that November retail sales at $399.3 billion were up 0.2 percent compared to October and up 6.7 percent annually. Total retail sales from September through November were up 7.4 percent compared to the same period a year ago.
This most recent increase was driven, in part, to a strong start to holiday shopping season. In late November, the National Retail Federation reported that in a survey it conducted with BIGresearch, total Black Friday spending hit $52.4 billion, adding that the average holiday shopper spent $398.62 over that holiday weekend compared to $365.34 last year.
IHS Global Insight Senior Principal Analyst Chris G. Christopher, Jr. wrote in a research note that although November retail sales grew at their slowest pace since June, news on the consumer front is improving, with upticks in consumer confidence, a decline unemployment rate last month, a slight decrease in gasoline prices, and a gain in real disposable income.
Christopher added that his firm believes holiday retail sales will be slightly less than 5 percent higher annually, with one-third of this increase due to higher prices, noting in 2010 holiday sales increase 5.2 percent annually following two years in negative territory.
Even though retail sales again were up, many industry experts still maintain that evidence of growth is needed over a longer period of time, considering that consumer spending represents about 70 percent of U.S. economic activity.
And as LM has reported, in conjunction with flat or minimally growing retail sales is an ostensible stalling in freight growth to a certain degree as evidenced by recent reports from the American Trucking Associations and Cass Information Systems. Reports in recent months from both concerns show that freight growth is in a holding pattern.
A major driver of these relatively slight sequential retail sales increases is that with relatively flat retail spending occurring to a large degree, retailers are postponing their commitments and are waiting until the economic outlook becomes clearer, while they are risking stock outages by having very lean inventories.
Tommy Barnes, president of Con-way Multimodal, told LM that he agreed with that assessment, explaining that low inventory levels are at the core of current retail spending trends and data.
“That is what it boils down to,” said Barnes. “The underlying signs in the economy are scary but nobody is ready to hit the panic button either. All of the signs out there show that we are still in a holding pattern to a large degree.”
In October, the NRF said that projected 2011 holiday spending—defined by the NRF as sales in the months of November and December—are expected to be average.
NRF officials said that 2011 retail sales will be up 2.8 percent over 2010, coming in at $465.6 billion. This expected growth pales in comparison to the 5.2 percent annual increase in 2009 over 2009.
And according to results of a recent survey conducted by Deloitte, 39 percent of its roughly 1,000 participants said they are likely to make their purchases later in the holiday season because they anticipate better promotions, and 22 percent said they are likely purchase earlier in the holiday season, because they are concerned merchandise may run out.
On the surface, this speaks to how retailers in recent years—early 2009, especially—were stuck with extra stock and were forced to unload it at heavily discounted prices. Consumers are still cognizant of this and may be playing a bit of a waiting game to see what types of deals are out there as the weeks go by. And retailers do not want to be in that same situation again and are being cautiously conservative with their inventory planning processes.
“It seems like retailers have learned their lessons on that front and because of technology retailers have become very astute in knowing what product is moving, what time of day it is moving, and how much of a markdown is needed to move a product,” said Jackie Fernandez, a partner in the Deloitte’s retail practice, in a recent interview. “Technology has really helped retailers in determining how much consumers buy, as well as the sell-through and analyzing what promotions move product faster than others.”
About the AuthorJeff Berman, Group News Editor Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman
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