November was a mixed month for retail, according to the latest numbers from the U.S. government. Consumers spent more than some observers expected, and retail sales among the sectors followed by Retail Dive rose 4.5%.
Though inflation looks to be easing, with gas prices notably down lately, it nevertheless made its mark in the period. Not only are high prices on essentials still squeezing household budgets, but its effect also meant that sales volumes in November were actually down by 0.8%, according to GlobalData research.
“As the Black Friday bonanza falls into November and has a big impact on the numbers, it is worth looking in more detail at behaviors over the period,” GlobalData Managing Director Neil Saunders said in emailed comments. “Our initial data suggest that it was a relatively strong period for retail, but in non-food this was only achieved with a lot more discounting than the prior year.”
This sets retailers up for a mad dash in the final days of the shopping season, with steep discounts the name of the game. As National Retail Federation CEO Matthew Shay put it in a statement on the first half of the shopping season, defined by the group as Nov. 1 through Dec. 31, “retailers are providing great products and experiences at the right price levels to help stretch household budgets.”
But November's retail sales report showed a consumer slow to spend on goods from nearly every non-grocery or food category unless there was a deal, according to Claire Tassin, a retail analyst at Morning Consult. “This shift is driven in part by ... the aggressive discounting by retailers as they pushed to move inventory and capture spending from price-sensitive shoppers,” she said in emailed comments.
In past years, including 2020 when vaccines were still relatively new and inventory was tight, retailers were able to keep prices elevated enough to notch healthy profits. This year there are fewer dawdling shoppers, but 44% who are waiting are doing so in the hopes of getting the best savings, according to coupon company Retailmenot.
Retailers are responding with fresh post-Black Friday deals. Target this week pushed 30% off clothing, accessories, shoes and seasonal decor and up to 40% kitchen appliances, and said further discounts of up to 50% and 60% video games, toys, decor, small appliances and more would be available after that. Deals site BlackFriday.com also tracked deep last-minute discounts at Amazon, Best Buy, Gamestop, J.C. Penney, Macy’s, Ulta and Walmart.
This environment is poised to linger into the new year, according to Fitch Senior Director David Silverman.
“Promotional activity thus far this holiday season has been greater than last year given higher levels of inventory, and we expect a noisy promotional environment to continue through the remainder of the holidays and into early 2023 as retailers create calls to action for consumers,” Silverman said in emailed comments.