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Buy Now Pay Later Helped Boost November Retail and Restaurant Sales

Consumer Spending Rises as Retail Sales Outpace Inflation

The headlines across various media outlets in the wake of the latest retail sales report zeroed in on the fact that the expectations had been for a decline.

The Department of Commerce’s report released Thursday (Dec. 14) showed that sales were up 0.3% in November, measured month on month, and consensus had been that the metric would slip 0.1%. The overall number also marked a reversal of October’s 0.2% slide.

Importantly, the fact that the data was not adjusted for inflation (although is adjusted for seasonal variations) means that consumers are filling their baskets, so to speak, above and beyond the pace of price increases. The Consumer Price Index (CPI) was up 0.1% in November, so the 0.3% rise from the Commerce Department signals a willingness to keep spending on more goods and more experiences. Year on year, retail sales gained 4.1%, above the CPI’s 3.1% gain through the same timeframe.

As to where consumers opened their wallets, sales at bars and restaurants were up 1.6% month on month, far outstripping the 0.1% gain at grocers, implying that individuals and families opted to dine out during the month.

In addition, spending at electronics and appliance stores slipped 1.1%, and department store sales slid 2.5%. Sales at non-store retailers, typically noted as a proxy for online sales, gained 1% in November, so the read-across here is that consumers clicked through web pages and loaded up their online shopping carts.

Digitally Driven Sales Activity

The government data dovetails with PYMNTS Intelligence findings late last month that online conduits were among the more widely embraced channels for buying goods and gifts. The study “Black Friday 2023: Consumers Widen Their Search for Holiday Bargains” found that 48% of consumers in the United States made Black Friday purchases online. Of those, 28% shopped online exclusively. Against a backdrop where Black Friday online sales reached $9.8 billion, up 7.5% year on year, electronics stood out as a key category.

The percentage of consumers who shopped online only grew from last year’s Black Friday digital shopping tally of 26% and represented a slight acceleration of about 0.2% over 2021’s levels, when the pandemic was still throttling brick-and-mortar commerce.

Buy now, pay later (BNPL) options were among the favored ways to pay, which seems to be giving consumers the confidence to spend more into the holiday season — again, outpacing the pace of inflation.

Coming out of the end of November, PYMNTS Intelligence found that U.S. consumers planned to spend $1,516 on their holiday purchases overall, having spent roughly a third of that — $533 — through the last weekend of November. Holiday shoppers who used deferred payment options spent $598, a total larger than the $452 average among those who did not use a deferred payment method.

Budgeting through the lens of paying over time had a lot to do with boosting November’s retail sales data, as presented by the Commerce Department, above expectations.

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