Despite all the fears retailers had surrounding ecommerce, warm weather, and ever-fluctuating shopping patterns, US holiday sales rose 3% in 2015 reports the National Retail Federation. Total US retail sales for the year reached an impressive $4.8 trillion, which accounted for over 20% of world retail sales, according to Retailing Today. That’s more than the GDP of 181 different countries.
Ecommerce did increase by 20%, but those online sales accounted for just 7.1% of total US sales. One reason may be that certain categorical purchases are largely contingent upon hands-on inspection, such as furniture and clothing. Furniture stores saw double-digit growth in 2015.
Clothing sales dwindled early in the season due to the unseasonably warm weather, with consumers not needing new winter apparel. Sales picked up by the end of the holiday shopping season, likely due to deep discounts. As the National Retail Federation explains, “consumers have become conditioned to expect discounts and promotions.” So although they are shopping more and buying larger-ticket items, consumers might not be spending more.
Unless you consider Mom and Pop stores. Although they can’t offer the same savings and deep holiday discounts that larger chains can, small retailers have seen a steady increase in sales for years. Consumers may wait for an inevitable sale to shop at a big-box store, but they are willing to pay full price at a smaller, local one. According to Sarah Quinlan, retailers with $50 million or less in annual sales outgrew total retail sales the last 44 months.
Small retailers aren’t the only industry on the up-and-up. Restaurant sales in the months of November and December have been “trending up between 4.2% and 6.4% since 2010,” according to USA Today. This past Thanksgiving and Black Friday, 63% of shopping center consumers dined in a shopping center restaurant during their shopping trip. However, many consumers are dining out for the experience itself, unrelated to convenience or necessity, exemplifying a trend of spending more money on experiences and travel instead of material goods.
Although Sarah Quinlan suggests that a double-digit increase in restaurant sales on Christmas day indicates a decrease in home holiday cooking, grocery sales may indicate otherwise. According to USA Today, Whole Foods shares gained 16.6% after Black Friday and Kroger shares increased 13.3%. Major grocery chains like Kroger and Publix usually report increased revenue during and after the holiday season. So although families may have dined out on Christmas day, they likely also gathered for home-cooked meals and parties in the weeks leading up to it.
Grocery spending after the holidays increases for two main reasons. After splurging on restaurants and goods all holiday-season long, consumers do more cooking at home to save money. New Year’s resolutions of eating healthier or losing weight also lead consumers to cooking at home in order to better control their diets.
Numerous reports released today focus on the 0.1 percent fall in December retail sales. However, these reports do not fully encompass consumer habits; excluded from these reports is consumer spending on most services, which includes movie theaters (Star Wars: The Force Awakens brought in an estimated $248 million during its opening weekend in North America). Printed in The Wall Street Journal, Amherst Pierpont chief economist Stephen Stanley said in a note to clients, “There is no question that households chose to spend their marginal dollar on services in 2015 rather than at retail stores. Thus, the retail sales releases, while they still capture the markets’ attention, have become much less relevant.”
This year consumers waited for retail deals that they knew would come, and they spent more money on experiences. And despite the unseasonably warm weather, rambunctious sales early in the season, and inadequate inventories in December, holiday sales as a whole increased by 3 percent (that’s $626 billion dollars). It will be interesting to see how retail sales affect economic growth in 2016.