2019 Holiday Retail Sales Rise 4.1%, Online a Key Driver

Sumit Singh

Trade related concerns, sluggish business spending and other geopolitical issues failed to dampen consumers’ shopping fervor this holiday season. Even six fewer days between Thanksgiving and Christmas compared with last year could not take away the sheen of the season.

A sturdy labor market, rising income and improving confidence certainly encouraged consumers to spend more. While bargain hunters did hit the streets, enthusiasm for online shopping was palpable.

Season Concludes on a Solid Note

A report from National Retail Federation (NRF) indicates that holiday retail sales, excluding automobile dealers, gasoline stations and restaurants, increased 4.1% year over year to $730.2 billion during 2019. Notably, sales came near the high-end of NRF’s holiday sales projection of 3.8-4.2% growth during November and December period, and also comfortably outpaced 2018’s modest increase of 2.1%.

Meanwhile, the retail trade association also highlighted that online and other non-store sales rose 14.6% to $167.8 billion during the festive season. The group had earlier forecast an increase of 11-14% in online and other non-store sales for the period.

Notably, strong performance across grocery and beverage stores, furniture and home furnishings stores, and health and personal care stores contributed to overall holiday sales. However, sales at sporting goods stores, clothing and clothing accessory stores, and electronics and appliance stores, were disappointing.

“This was a healthy holiday season, especially compared with the decline in retail sales we saw at the end of the season in 2018,” NRF chief economist Jack Kleinhenz said. The numbers look robust compared with 2018, when sales were affected by U.S. government shut down, a battered stock market and increase in consumer savings.

Markedly, a report from Mastercard SpendingPulse indicates that sales from Nov 1 through Dec 24 increased 3.4%, excluding automobiles. Meanwhile, online sales surged 18.8%, and made up 14.6% of total sales. Steve Sadove, a senior advisor for Mastercard stated “E-commerce sales hit a record high this year with more people doing their holiday shopping online.”

Retailers’ Holiday Sales Report Card

The retail space has witnessed fundamental changes in its dynamics with technology taking center stage and online shopping gaining preference over traditional ways. Amazon AMZN in a release informed that the festive season was a record breaking one with a number of items delivered through prime free one-day and prime free same-day delivery nearly quadrupling.

Retailers namely, Zumiez ZUMZ and Signet SIG reported comparable sales increase of 6.8% and 1.6%, respectively for the holiday season. Also, lululemon athletica LULU witnessed continued momentum during the holiday season in 2019, driven by favorable customer response for its innovative merchandise.

Holiday sales rose despite of a slew of companies disappointing with their holiday season performance. Macy’s M comparable sales on an owned plus licensed basis decreased 0.6% during November and December period combined. Also, L Brands LB and J. C. Penney JCP witnessed comparable sales decline of 3% and 7.5%, respectively.

Wrapping Up

With increasing preference for online shopping, retailers as a whole faced two primary challenges. Firstly, the companies need to constantly upgrade themselves digitally to take on e-retailers. Secondly, they need to come up with innovative ways to draw customers to brick-&-mortar outlets. From opening smaller-format stores to bringing in new loyalty program and from embracing new technologies to providing fast delivery options on online purchase or via apps, they have been taking initiatives to stay in the race and cater to growing customer needs.

Clearly, the retail industry ended 2019 on a strong footing. Increasing consumer confidence will surely continue to be one of the prominent driving factors in 2020. NRF president and CEO Matthew Shay opined that the holiday sales number instills optimism about higher investment and rising opportunity in the industry.

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Click to get this free report Amazon.com, Inc. (AMZN) : Free Stock Analysis Report lululemon athletica inc. (LULU) : Free Stock Analysis Report Zumiez Inc. (ZUMZ) : Free Stock Analysis Report L Brands, Inc. (LB) : Free Stock Analysis Report Signet Jewelers Limited (SIG) : Free Stock Analysis Report Macy's, Inc. (M) : Free Stock Analysis Report J. C. Penney Company, Inc. (JCP) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research