Increase in October Sales a Good Sign for Holidays
By Doug Desjardins
Retail sales continued to improve in October, results that have retailers more upbeat about holiday sales than they’ve been in years.
October sales increased 1.2 percent, a small jump that nonetheless was one of the biggest monthly increases this year and an improvement over August and September when sales increased less than 1 percent. While the slight increase is a sign that the retail environment is still sluggish, it’s still good enough to make analysts confident the trend will build into the holiday season.
“We expect the holiday shopping season to really ramp up in November,” said Guy LeBas, a retail strategist with Janney Montgomery Scott in Philadelphia.
Results varied by category but were fairly uniform. Apparel sales increased 0.7 percent for the month while sporting goods and music sales jumped 1 percent. Building supply sales increased 1.9 percent and online retailer Amazon.com reported a 1-percent jump in sales. Video games were one of the strongest categories, with sales for the month increasing 6 percent after several consecutive months of declining sales.
Several retail categories reported a slight decline in October sales, with department stores and home electronics retailers both reporting a 0.7-percent drop in sales.
“While spending throughout the industry was varied, it appears the fourth quarter has gotten off to a good start,” said National Retail Federation chief economist Jack Kleinhenz. “October’s results are a clear indicator that the economy and consumer spending continue to show marked improvement, even though we expect consumers to proceed with caution.”
While sales are improving, analysts aren’t expecting a big increase in sales during the holidays or in early 2011 due to an economy that’s been slow to recover.
“We’ve established a nice, solid uptrend at this point,” said Stephen Stanley, chief economist at Pierpont Securities, adding that a significant jump in sales isn’t likely to happen until unemployment falls well below its current rate of 9.6 percent, a rate that’s remained largely unchanged for six months.
That’s a key reason analysts are expecting only a moderate increase in holiday sales this year. The National Retail Federation (NRF) is forecasting a 2.3 percent increase in holiday spending, just below the 10-year average of 2.5 percent. The low-single digit increase isn’t much but it’s a marked improvement from a 0.4 percent increase in 2009 and a 3.5 percent decrease in 2008.
“While consumers have shown they are once again ready to spend on what’s important to them, they will still be very conscientious about price,” said Kleinhenz. “Retailers are expected to compensate for this fundamental shift in shopper mentality by offering significant promotions throughout the holiday season and emphasizing value throughout their marketing efforts.”
Resources
October Sales Raise Hope of a Merry Christmas
Retail sales Post Strongest Gains in Seven Months
October Retail Sales up 1.2 Percent
NRF Forecasts Holiday Sales Increase of 2.3 Percent
COUPON TIME
We're coming up quick on the best bargain day of the whole year: Black Friday! Don't miss a single one of the Black Friday Sales we're featuring!
