Grocery sparkles in dim holiday sales report

Sales of food, beverages and consumer packaged goods rose during the holiday period even as retail sales overall grew a lower-than-expected 2.9 percent.

The numbers, which exclude automobile dealers, gasoline stations and restaurants, fell short of NRF’s forecast last fall that holiday sales from Nov. 1 through Dec. 31 would grow between 4.3 percent and 4.8 percent to between $717.45 billion and $720.89 billion. The total includes $146.8 billion in online and other non-store sales, which grew 11.5 percent over 2017. NRF had forecast that the online sector of retail would grow between 11 percent and 15 percent to between $151.6 billion and $157 billion.

The official numbers for the holiday season were released Thursday after a four-week delay due to the shutdown of the federal government. 

“All signs during the holidays seemed to show that consumers remained confident about the economy,” NRF President and CEO Matthew Shay said. “However, it appears that worries over the trade war and turmoil in the stock markets impacted consumer behavior more than we expected. There’s also a question of whether the government shutdown and resulting delay in collecting data might have made the results less reliable. It’s very disappointing that clearly avoidable actions by the government influenced consumer confidence and unnecessarily depressed December retail sales.”

November – the first half of the holiday season – grew 5.1 percent unadjusted year-over-year. But December was up only 0.9 percent year-over-year and down 1.5 percent seasonally adjusted from November. NRF does not count October as part of the holiday season, but much holiday shopping has shifted earlier, and October was up 5.7 percent year-over-year. As of December, the three-month moving average was up 0.7 percent over the same period a year ago.

“Today’s numbers are truly a surprise and in contradiction to the consumer spending trends we were seeing, especially after such strong October and November spending,” NRF Chief Economist Jack Kleinhenz said. “The combination of financial market volatility, the government shutdown and trade tensions created a trifecta of anxiety and uncertainty impacting spending and might also have misaligned the seasonal adjustment factors used in reporting data. This is an incomplete story and we will be in a better position to judge the reliability of the results when the government revises its 2018 data in the coming months.”

NRF’s numbers are based on data from the U.S. Census Bureau, which said that overall December sales – including auto dealers, gas stations and restaurants – were down 1.2 percent seasonally adjusted from November but up 2.3 percent unadjusted year-over-year.

The holiday numbers come as NRF is forecasting that retail sales during 2019 will increase between 3.8 percent and 4.4 percent to more than $3.8 trillion.

Year-over-year results from key retail sectors during the November-December holiday season include:

• Online and other non-store sales were up 11.5 percent at $146.8 billion.
• Clothing and clothing accessory stores were up 4.2 percent at $61.7 billion.
• Health and personal care stores were up 2.6 percent at $60.8 billion.
• General merchandise stores were up 2.3 percent at $146.8 billion.
• Grocery and beverage stores were up 1.9 percent at $130.5 billion.
• Building materials and garden supply stores were up 1.6 percent at $61.5 billion.
• Electronics and appliance stores were up 0.2 percent at $22.3 billion.
• Furniture and home furnishings stores were unchanged at $22.6 billion.
• Sporting goods stores were down 13.5 percent at $16 billion.

NRF also said this week that imports at the nation’s major retail container ports have dipped since peaks seen last fall but remain at higher-than-usual levels as a possible increase in tariffs on goods from China approaches in March, according to the monthly Global Port Tracker report released by the National Retail Federation and Hackett Associates.

“With trade talks with China still unresolved, retailers appear to be bringing spring merchandise into the country early in case tariffs go up in March,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “We are hopeful that the talks will succeed, but until the trade war is behind us, retailers need to do what they can to mitigate the higher prices that will inevitably come with tariffs.”

U.S. tariffs of 10 percent on $200 billion worth of Chinese goods that took effect last September are scheduled to increase to 25 percent on March 1 unless negotiations that began in December are successful.