Overall retail sales increased 1.7% seasonally adjusted from September and 16.3% from the same month last year, according to the National Retail Federation (NRF). The increase underscores expectations that consumers would start shopping for the holidays earlier this year to avoid out-of-stock items due to supply chain issues. Several major retailers set holiday sales earlier in the season to encourage earlier shopping.
NRF has projected a rosy picture for 2021 retail sales, with an expectation that sales for the year will reach $4.44 trillion to $4.56 trillion, up between 10.5% and 13.5% from 2020. Consumers are in stronger positions in 2021 thanks to the remaining impact of stimulus funding and less spending in 2020, according to NRF.
“Retail sales data for October reflects the enduring strength of consumers’ finances and willingness to spend as the holiday season gets underway,” NRF President and CEO Matthew Shay said in a statement. “The robust balance sheets of American households are being met by retailer preparation and hard work to provide products that consumers want at competitive prices.”
The October sales increase comes after a slight increase of 0.8% in September. While some months reported sales declines, sales have grown year-over-year every month since June 2020, according to Census data.
“While it’s difficult to parse out exact amounts, the figures reflect the combined effects of Halloween and early holiday shopping,” said Jack Kleinhenz, NRF’s chief economist. “Even though consumers may have begun shopping early to avoid inventory shortages, November and December are still when they do most of their holiday shopping, so much remains ahead of us.”
The sales increase also coincides with higher inflation rates, likely impacting consumers as prices rise. In addition, the COVID-19 pandemic continues to play a role in shopper behavior, though it has not held back spending so far during the holiday shopping season.
“Concerns about high prices are weighing on consumer sentiment, but that has not held back spending,” Kleinhenz said. “As it has for more than a year-and-a-half, COVID-19 remains a significant factor should there be an increase in coronavirus infections that could cause a pullback in spending.”
NRF is forecasting the holiday sales to be record breaking, even as the retail industry faces supply chain issues and staffing shortages.
“Despite significant challenges including supply chain issues, labor shortages, rising inflation and OSHA’s impending employer vaccine mandate, retailers are continuing to safely serve consumers online and in stores,” Shay said. “Today’s numbers show that consumers are getting a jump on their holiday shopping. We continue to urge consumers to shop early and shop safely, and we fully expect this holiday season to be one for the record books.”