The Big Picture
Overall retail sales continue to be brisk, despite rising inflation. U.S. sales increased by 1.7% in October, the biggest gain since March, when stimulus checks boosted many consumers’ incomes. It’s worth noting, however, that part of this sales increase is due to the rising cost of goods, which is included in these top-line numbers.
Shoppers are certainly feeling the pinch from inflation, which is at a 31-year high, rising over 6% just last month. But wealthier households continue to spend, and even the middle class, though squeezed by higher prices, are ready to shop.
Some are tapping into the savings they accrued last year, but others are relying on credit—credit card balances started rising in October, according to the Wall Street Journal. The combination of inflation and increasing debt should be viewed with caution.
But, for now, there’s still plenty of enthusiasm. Some 73% of shoppers expect to spend more, or significantly more, this holiday season compared to previous years, according to a Deloitte survey. This means a very merry holiday for our merchants.
October Sales
Even though all of the numbers aren’t in yet, we are seeing an average 15% increase in sales among our client stores last month, compared to 2019.
Demand is across the board. In women’s, sweaters, knits, and jeans are popping, while menswear sales include shirts, sweaters, jackets, jeans, and five-pocket pants. Men’s Clothing has also seen a lift, as weddings continue to drive business. In fact, October sales were as strong as we can remember, and demand has not let up this month so far.
2022 Strategy
In the remaining weeks of this year merchants should look for any off-priced opportunities on non-seasonal goods. It won’t be easy, but it’s possible (we have some merchants successfully doing this.) This strategy will be key to helping you keep your margins up going into next year.
It’s also time to make sure that you’re on-orders for spring are in the system and ready to go. It’s important that we buy based on educated forecasts and don’t get ahead of ourselves.
The recent lack of goods has made some merchants jumpy, but if you overbuy for spring, you could potentially be flooded with inventory and lose the margin advantage you’ve gained over the last year.
Even if demand stays unbelievably high, you will still be able to order more goods, especially since the supply chain won’t be as backed up in the months ahead. So, keep your purchases in-line with your growth forecasts.
Blacks Bottom Line
Enjoy what looks to be an incredible holiday season, but keep one eye focused on margin. This will be key for a smooth landing into a more normal sales pattern.
