An Octoberfest for retail sales

October is becoming a blockbuster month for retail sales as shoppers pull their holiday purchases forward

As we head into the holidays, supply chain considerations are impacting how consumers are shopping. It’s hard to watch the news and not get bombarded with images of cargo ships and containers and doomsday messages about the state of the retail supply chain.

While there are supply constraints this holiday season, retailers have been working hard to address these issues and keep their shelves stocked for the holidays. We’re confident that consumers are going to spend heavily for the holidays and that the inventory will be there for them.

“NRF’s initial holiday forecast of 8.5-10.5 percent was already based on a scenario of significant consumer strength, but we now believe there’s a case to be made that holiday sales could exceed this range and rise as high as 11.5 percent.”

Mark Mathews, VP, Research Development & Industry Analysis

NRF’s initial holiday forecast of 8.5-10.5 percent was already based on a scenario of significant consumer strength, but we now believe there’s a case to be made that holiday sales could exceed this range and rise as high as 11.5 percent.

On a year-to-date basis, retail sales are already up over 14 percent compared with last year, so there is strong spending momentum as we head into the last month of the year. Just maintaining our annual pace will push us over the top of our forecast range.

Nonetheless, some have pointed to spending over Thanksgiving weekend as a harbinger for weaker seasonal growth. But let’s be clear on one thing — while Thanksgiving weekend remains an extremely important milestone for retail sales, it does not necessarily define the holiday season any longer. Black Friday used to kick off the holiday shopping season, but times have changed.

NRF and others have been advocating for consumers to start shopping earlier over the last two years. It appears they’ve been listening and taking advantage of promotions that start much sooner. By the end of Thanksgiving weekend, over 43 percent of consumers reported that they’d already completed 50 percent or more of their shopping. This cohort of early shoppers has been growing over the past few years and might be having an impact on October retail sales data.

When we look at monthly retail sales as supplied by the U.S. Census Bureau, October has become a much more prominent month in the holiday mix. Excluding November and December (which remain the heaviest months for retail sales), October has ranked higher for retail sales (on a non-seasonally adjusted basis) than any other month in both 2020 and 2021. On a seasonally adjusted basis, October has been ranked in the top two months of the year for the last three years (2018-2020) — and that’s including November and December in the mix.

In terms of monthly spending as a percentage of total annual sales, October 2020 contributed significantly more to annual sales than previous Octobers. Of course, additional factors come into play: Amazon’s Prime Day in 2020 was pushed into October due to the pandemic, and other contributors would need to be examined before we can make any definitive proclamations.

Consumers might revert to spending as usual in the future, but for the moment, it looks like early shopping could be shifting the shape of retail spending over the course of the year. If this trend continues in future years, we might have to reconsider how we define the holiday period. For 2021 though, despite the early shopping, we believe there’s enough consumer firepower remaining to push us toward the strongest holiday season we’ve had in decades.

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