The Big Picture
Although December’s top line retail sales numbers looked disappointing on the surface — slipping 1.9% compared to last year — overall holiday sales beat records. From the November to December period alone, the National Retail Federation (NRF) estimates that sales grew by 14.1% to nearly $887 billion.
These gains were even more impressive given the inflationary pressures and supply chain issues faced by many merchants. The Labor Department announced that inflation was up 7% in December over last year, with housing, transportation, and food prices continuing to climb.
What these inflation numbers don’t highlight is the major underlying cause: unabated demand. This is because Americans saved more money during the pandemic than ever before, estimated at about $2.7 trillion. As that money quickly got pumped back into the economy, supply was strained, and prices rose. What’s more, there’s plenty more left to spend, indicating that inflation will be with us for a while, but so is the opportunity to pull in more sales gains.
Holiday Roundup
Overall retail sales numbers tell one story, but the results in our specialty stores tell another. Our client stores were up by an average of 33% from October 1st to December 31st compared to 2019. (This period takes the early shopping we saw more into account.) These gains are nearly double the overall retail sales for the same period, which came in up 17.1%, according to Commerce Department figures.
First-Quarter Revisions?
January and February of 2021 were some of the hardest months for our merchants, as many stores had pandemic-related closures. Since we are going up against these soft numbers, we initially expected gains for the first two months of this year. But, given the recent Omicron surge, and multiple severe weather events, some stores may not beat last year’s numbers.
However, it’s still too early to tell and stores that did unbelievably well last year continue to post gains. Our advice right now is to stick to your current plans until we get further into the quarter. We will know over the next few weeks if the slow start is just a blip, or if there is a definite softening in demand.
Fall Prep
For the 3rd and 4th quarters we are planning sales roughly even to last year, but much depends on the region. Some areas will continue to post gains, while others may be slightly down. Your Blacks’ analyst can help you clarify your specific trajectory. We are in uncharted territory, so things can change quickly. But we do believe this could be another strong year.
Blacks’ Bottom Line
Stick to your spring inventory plans. As we roll in new inventory we expect traffic to increase.
