Retailers have momentum heading into the holidays

The landscape: Retailers headed into the holiday season with the wind at their backs.

• Retail sales grew 2.8% YoY in October and 0.4% month over month (MoM), per the US Commerce Department. That was ahead of the 0.3% MoM growth that analysts expected.
• Nonstore retailers, which are largely ecommerce stores, grew the fastest, at 7.0% YoY. That may stem from the array of high-profile sales events that Amazon and other retailers held throughout the month.
• Bar and restaurant sales grew 4.3% YoY, which suggests that the 3.8% YoY increase in food away from home prices didn’t spoil consumers’ appetites for eating out.

The picture looked less rosy for the so-called control group, which strips out automobiles, gasoline, building materials, and food services: Sales declined 0.1% MoM in October, short of the 0.3% growth analysts expected.

Key context: September’s control group sales were revised up to 1.2% MoM from 0.7%. And if you zoom out, control sales over the last three months were up 4.6% YoY, which suggests most consumers remain willing to spend.

Looking ahead: October’s results bode well for retailers as they enter the most crucial stretch of the holiday season.

• A record 183.4 million people plan to shop from Thanksgiving Day through Cyber Monday this year, per the National Retail Federation’s Cyber Five annual survey. That’s up nearly 11% from 165.3 million in pre-pandemic 2019.
• We expect Cyber Five retail ecommerce sales to grow 5.6% YoY this year. That would be the fourth straight year that online sales over that period accelerated—and the largest percentage gain since 2020.

Our take: Retailers caught a break earlier this month when the presidential election was called in the wee hours of election night rather than dragging on for days or weeks on end, which helped them avoid one of the possible disruptions to the holiday season we mapped out in August.

• The results of the race have also driven some to “doom spend” to cope with their stress, with many documenting their retail therapy on TikTok. That approach is particularly common among younger consumers: 37% of Gen Zers and 39% of millennials report “doom spending,” per a survey conducted on behalf of Intuit Credit Karma.
• We expect holiday retail sales to grow 4.3% YoY this year, with strong gains in categories such as food and beverage; apparel, footwear, and accessories; and health and personal care.

Go further: Check out our US Holiday Shopping 2024 report.