Retail Sales Fell 0.6% in November, Despite Black Friday

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Retail sales fell in November, with spending on even traditionally popular gift categories like clothing and sporting goods declining, a sign that high prices for necessities like food are affecting how people approach the holiday shopping season.

U.S. retail sales fell 0.6 percent in November from October, the Department of Commerce said on Thursday. The figure does not account for price changes, and inflation did ease slightly during the month.

Spending increased in some areas, including at grocery stores, health and personal care stores and restaurants and bars. But categories like motor vehicles, furniture, consumer electronics, clothing and sporting goods all declined. Gas prices also fell during the month, meaning consumers spent less money filling up their cars.

“Overall, the demand patterns — not the most academic term — have been out of whack for the past few years and what we’re seeing is these disruptions coming back in these forms,” said Andrew Forman, who studies consumer behavior at Hofstra University’s Frank G. Zarb School of Business. “There are so many moving factors.”

Inflation in November slowed to 7.1 percent through the year, down from 7.7 percent in October. Some analysts pointed out that lower prices affected the retail sales figure.

“Less inflation is driving some of that decline from October to November, which wouldn’t be a bad thing,” David Silverman, a senior director at Fitch Ratings, said.

In many ways, the report highlights how inflation, even if it has eased, has changed the way consumers are approaching the holiday season. Americans, for example, are whittling down the number of people they are giving gifts to, according to data from KPMG.

Inflation F.A.Q.

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What is inflation? Inflation is a loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation and toys.

What causes inflation? It can be the result of rising consumer demand. But inflation can also rise and fall based on developments that have little to do with economic conditions, such as limited oil production and supply chain problems.

Is inflation bad? It depends on the circumstances. Fast price increases spell trouble, but moderate price gains can lead to higher wages and job growth.

Can inflation affect the stock market? Rapid inflation typically spells trouble for stocks. Financial assets in general have historically fared badly during inflation booms, while tangible assets like houses have held their value better.

“Those are some signs that those core categories are just taking quite a bit of our budget away and we can only do so much during the holiday season,” Matt Kramer, KPMG’s consumer and retail national sector leader, said.

Grocery stores posted a 0.8 increase in sales from the previous month. Sales at health and personal care stores increased 0.7 percent. Restaurants and bars saw a 0.9 bump. Sales at gas stations fell 0.1 percent, whiles purchases at motor vehicle and auto parts dealers declined 2.3 percent.

November marked the official start of the holiday shopping season. Nearly 200 million Americans shopped during the Thanksgiving weekend, which included Black Friday and Cyber Monday, according to the National Retail Federation, an industry trade group. The average amount that shoppers spent that weekend was more than $325, the group said, up 8 percent from last year.

In reality, though, the holiday shopping season began long before Black Friday. In recent months, retailers have been advertising more discounts to sell excess inventory and entice people to spend as early in the year as possible. By securing those early holiday sales, the calculation went, retailers could avoid consumers’ increasing concerns about a possible recession in the new year.

The average sales discount for Black Friday deals was 30 percent, according to Salesforce. That was slightly more than the average discount rate of 29 percent in 2021.

Many experts say the earlier-than-usual deals were reflected in the October retail sales figures, when sales rose 1.3 percent from September.

“Price discounting by retailers overloaded with inventory during the all-important holiday shopping season likely pushed sales lower, as did lower gasoline prices,” Oren Klachkin, lead U.S. economist at Oxford Economics, wrote in a note.

The shift to services and experiences may also be playing a role, Mr. Kramer said. More money this holiday season could be spent on travel that couldn’t happen during the pandemic.

Consumers may also be feeling shopping fatigue after having spent money on all manner of items earlier in the pandemic. After two years of significant spending and robust holiday shopping seasons, retailers are up against tough sales comparisons, Mr. Silverman said. Despite the decline from the previous month, retail sales in November were up 6.5 percent from a year earlier.

“I prefer to see the full dynamics of the season,” Mr. Silverman said. “I think that gifting could take the form of tickets to something. It could also take the form of gift cards — those don’t count as retail sales until they’re spent. Those dynamics do come into play as well.”

Inflation, which Americans have been experiencing most of this year, is shaping up to become the defining factor for the holiday shopping season. Many of the same patterns that played out in November, such as shoppers’ concerns about the economy, are likely to remain in the final weeks of the year.

“The ability to spend is impacted by inflation and they’re trying to change that mix in their basket to make up the difference between what they earn and take home every month and what things cost,” said Matt Shay, N.R.F.’s president and chief executive officer.

Mr. Shay noted that spending has been supported by a strong labor market, rising wages and “some households increasingly taking on additional debt or tapping into savings to help meet those monthly expense increases.”

Still there is a question of what demand will look like in December. Since retailers used sales to entice shoppers to start their holiday spending while many of them were still carrying Halloween merchandise, consumers may be less inclined to spend in the weeks leading up to Christmas.

Retail executives have said they recognized this dynamic and were planning to offer even more discounts as the holiday approached.

“We think that individual company execution has become much more important as retail sales slow down somewhat,” Mr. Silverman said.

Retail holiday sales last year were up 14.1 percent from 2020, according to N.R.F. The expectations this year are more temperate. N.R.F. said it expected holiday retail sales from November to December to increase 6 to 8 percent compared with last year.

“I think it’s still going to be a solid year,” Mr. Kramer said. “I do think the consumers will be out but there’s only so much budget to go around and there won’t be these huge jumps like we saw last year.”