Slumping Department Store and Electronics Purchases Cut Nov Retail Sales to 0.3%

Total retail sales slowed to a much weaker than expected 0.3% in November, as sharp declines at department stores and electronics and appliance dealers pulled the pace of holiday season shopping down from an 8-month high of 1.8% in October.

According to the latest report released by Census Bureau at the U.S. Department of Commerce Wednesday, when gains in gasoline and food and restaurant are backed out, the pure retail number came in at just 0.2% compared to the prior month.

Drilling into the results, the 5.4% month-on-month decline felt by department stores marked the largest hit among the 15 categories tracked by the government. That was followed by a 4.6% drop in electronics and appliance retailers, and a 1.2% decline at general merchandise stores.

On the upside, November gas station sales rose 1.7%, followed by 1.3% advances in sales at both Food & Beverage retailers as well as the broad and diverse mash-up known as Sporting Goods, Hobby, Musical Instruments & Books. Restaurants (+1.0%), Building Materials (+0.7%) and Clothing & Accessories (+0.5%) were also above trend for the month, albeit at a slower pace than previous reports.

The Inflation Factor

While the Census Bureau data does not reflect price changes, the effects of roughly 7% inflation were readily visible in the annualized sales data which saw stripped down retail trade sales excluding gas and autos rising 16.1% from November 2020. The year-on-year data was led by a 52% spike at gas stations and a 37% increase at food service and drinking places, the report said.

So-called non-store sales, which include online retail, were statistically flat last month, registering at 0.0% from October, despite a spate of early holiday sales the ran for most of November.

Given that the latest Consumer Price Index reading of 6.8% marked a 39-year high in annual price increases, it is safe to say a large portion of the retail sales increases are being driven by inflation rather than consumer demand.

Retailers are not only facing the challenge of high prices and inflation, they’re also facing a herd of other headwinds that are complicating things during their busiest and most important time of the year, including an ongoing assault from a mix of supply chain constraints that have heightened importation and inventory challenges.

At the same time, the nation’s leading chain stores are also facing an acute shortage of hourly employees needed to serve customers, stock shelves and clean stores. To that point, on Tuesday, the Department of Labor reported that there were currently over 11 million job openings in the U.S.

Taken together, the ongoing uncertainty surrounding COVID, including the latest omicron variant that is worsening by the day, and the budding rebound of in-store shopping that is facing the rising threat of health restrictions again are impacting the retail outlook.

To be sure, PYMNTS’ new Connected Consumer data showed an increasing comfort and frequency with shopping online, where 18% of the 3,100 survey respondents said they now make at least one eCommerce purchase per week, while 4% of super-connected shoppers now buy something online every day.

Read more: 18% of Connected Consumers Now Make Weekly Online Purchases, 4% Do So Daily