November, which is the first proper month of the holiday season, proved to be a solid affair for retail. Overall sales grew by a robust 4 per cent. Some of this is due to lingering inflation but even when this is stripped out, underlying volumes were still up by 1.8 per cent. The month was one dominated by discounting and deals as retailers kicked off Black Friday early. This meant consumers – who were generally receptive to bargains – were very active across the whole of the month.
Core retail – which excludes gasoline, foodservice and auto sales – grew by 3.8 per cent. While this was a deterioration over last month’s stellar growth rate, it remains a little above average for the year so far and so can be chalked up as a good win for retail. While a strong Black Friday period, which spanned the whole month, can be thanked for stimulating the consumer into spending, this was not the only factor at play. The arrival of winter weather after a very mild start to the season also spurred spending on both winter apparel and home improvement products – including buying items at full price.
The conclusion of the election early in November gave a previously distracted consumer some extra breathing space to focus on preparing for the holidays. The definitive outcome of the election was also helpful in preventing consumer uncertainty from rising. From all our research, we believe the election result had a mildly positive impact on spending – especially as a narrow majority said the outcome would be broadly favorable for the future economy. Quite how this holds into December remains to be seen. However, we think the tax policies of the incoming administration will be helpful for spending in 2025. The big uncertainty is tariffs which, if not managed carefully, could push up prices and dampen volume growth.
On a category basis, apparel stores had a very good month with 3.7 per cent growth. There were plenty of offers and deals in clothing which helped spending and, from our research, many of these were more generous than they were last year. The interest this sparked with consumers was aided by an accelerated rate of buying of winter products towards the end of the quarter as the weather turned colder across many parts of the country. After a long period of casualization, we also found that many consumers opted for dressier and stylish garments for the Thanksgiving period. Across Black Friday, there was a big focus on stocking up on everyday apparel and buying basic closet essentials.
Furniture and home stores notched up growth of 1.5 per cent, which is something of a win for a sector that has been depressed for most of the year. That said, the early deals from October meant that many consumers had pulled forward spending, which took the edge off growth. The housing market remains soft but is not as terrible as it was during the first part of the year. This continues to inject a little more energy into home-related sectors. This includes electronics, where stores posted sales growth of 1 per cent. Although volumes here are up by only 0.2 per cent, this underlines the ongoing challenges of getting consumers to spend on big-ticket items. We also found that consumers focused firmly on lower-priced televisions and other products rather than on big budget-buster premium items.
At food and beverage stores, sales increased by 2.8 per cent. Some of this is due to inflation, although on core Thanksgiving fare prices were largely flat over last year as retailers competed for customers. Many shoppers prioritized food in their holiday budgets, and while value options were popular, there was plenty of trading up for treats and indulgences.
Overall, the holiday season has started very well, and while December growth may be a bit more muted, it should still come in as nicely positive. The consumer has shown remarkable resilience over the course of this year, and it is now almost certain that they will not fall at the final hurdle.
