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Wednesday, January 19, 2022

Retail sales fell in December, a slowdown due to the active holiday shopping season.

Retail sales fell 1.9% in December, the Commerce Department said Friday, reflecting a slowdown during the busy holiday shopping season that began for many consumers earlier this year.

It was the first drop after four straight months of sales growth, although growth in November slowed from October due to a lengthened holiday shopping season on fears of shortages of goods and higher prices. According to the report, total sales from October to December were up 17.1% from the same period a year earlier.

Beth Ann Bovino, chief US economist at S&P Global, said that while the weaker numbers could not fail to cause a “shock,” the broader picture of retail sales has been strong over the past few months.

“This is not a sign of consumer weakness,” said Ms Bovino, who had forecast a decline. “Given that households have relatively strong balance sheets with high savings rates and strong labor markets with rising wages, it seems that consumers are not necessarily closing their wallets. They take a short pause.

The retail sales report provides data on consumer sentiment after this week’s report showed inflation hit its highest level in 40 years at the end of 2021. Prices have risen as new coronavirus variants have worsened the supply chain. issues and stable consumer demand for goods. At the same time, the Omicron surge caused widespread staff shortages and may have played a role in distracting some consumers from shopping and holiday gatherings.

Morgan Stanley economists had forecast retail sales to grow 0.4% in December. While inflation surpassed the coronavirus as the # 1 problem for consumers surveyed in November, it “hasn’t affected spending plans,” according to a note last week.

Instead, the holiday shopping season appears to have broken records, with low-income consumers seemingly operating with relatively higher purchasing power, economists write. At the same time, they expected the Omicron surge to drive up spending on goods rather than services.

The pandemic continues to shape consumption habits in the United States.

Fewer people shopped in stores this holiday season, although the Omicron variant did not pose a discernible threat until December. US retail store traffic declined 19.5% year-on-year between November 21 and January 1, according to Sensormatic Solutions. This was a slight improvement from the height of the pandemic in 2020, when foot traffic fell 33.1 percent over the same period compared to 2019, but still a significant change.

As retailers grapple with inflation and supply chain problems, this has given an additional edge to the largest US retailers. They have already benefited from the pandemic by being able to stay open while others are closed, thanks to the variety of goods they carry and through initiatives such as street delivery.

“We’re talking about Walmarts, Targets and Costcos, the big players,” said Mickey Chadha, retail analyst at Moody’s Investors Service. “They have rented their own ships and are bringing in products. They have a lot more power with suppliers to get priority. And they did plan ahead. “

At the same time, Mr Chadha said, they have not had to raise prices as much as smaller retailers have, and are likely to benefit as low-income consumers seek the benefit to stretch their dollars.

“They are capturing market share because they have the ability to charge lower prices and absorb the shock much better than some of the smaller and weaker retailers,” he said.

Costco, for example, said in its December profit and loss statement that it believes it is successfully coping with the impact of inflation through its relative purchasing power and supplier relationships. This often meant that Costco and its suppliers were charging less in price premiums, Richard Galanti, the company’s chief financial officer, said by phone.

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“We’ve always said we want to be the last to raise the price and the first to lower it, recognizing that there is a limit to what you can do based on this increased cost,” said Mr. Galanti.

Costco also admitted that while it was grappling with inevitable supply chain problems, including the delayed arrival of containers on the west coast, it felt “pretty good staying in the warehouse.”

Many other retailers said supply chain problems cut their revenues last year, as the pandemic and shipping delays in Vietnam prevented goods from appearing on American shelves and warehouses.

“The holiday was weaker than expected as the units that were due to arrive in December did not make it through the ports as we expected,” Abercrombie & Fitch CEO Fran Horowitz told a conference on Tuesday. “It was out of our control and resulted in no sales during peak sales. In addition to these detained units, we have also faced new Covid-related restrictions around the world. ”

However, some retail executives said they were more likely to face supply rather than demand, especially given the spikes in consumer preference over the past 18 months. And it is not yet clear if the rise in prices will reduce demand, given the quarterly results.

S&P’s Ms Bovino said she expects consumer spending to remain strong in the short term, especially given the attitude towards pricing over the holidays.

“Households seem to forgive retailers for their very high prices,” she said. “It’s been almost two years – they wanted to celebrate.”

Ms Bovino added that she expects more selective shopping later this year as savings accounts begin to deplete and consumers “remember what prices looked like before.”

Retail sales in January may also be affected by reduced store hours and closures as the Omicron surge is causing widespread headcount shortages across many industries. This data will provide a better understanding of how consumers are responding to inflation.

World Nation News Deskhttps://www.worldnationnews.com
World Nation News is a digital news portal website. Which provides important and latest breaking news updates to our audience in an effective and efficient ways, like world’s top stories, entertainment, sports, technology and much more news.
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