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US Holiday Retail Sales Growth Falls Short of Projections

But in Positive Sign for Retailers and Their Landlords, Two of Nine Store Categories Saw Gains

Photo Courtesy of Jelena.

The holiday shopping season didn't turn out to be quite as jolly and robust as some forecasters predicted.


But in a positive sign for retailers and their landlords, two of nine store categories still registered gains and mall foot traffic rose, according to the National Retail Federation and analytics firm Placer.ai. The trade group reported on Wednesday that retail sales during November and December rose just 5.3% over 2021 to $936.3 billion, falling shy of its projections amid continuing inflation and high interest rates. In addition, the Commerce Department announced that U.S. retail sales declined a seasonally adjusted 1.1% in December from November.


The NRF, which held its annual national conference in New York this week, still took an optimistic view of the holiday sales figures, saying they were not that far below the group's original forecast and that retail sales for last year overall year are up and meeting its expectations. In 2022, retail sales increased 7% as expected, and sales for the year grew 7% over 2021 to $4.9 trillion, meeting NRF’s forecast of between 6% and 8% growth for the year.


“We knew it could be touch-and-go for final holiday sales given early shopping in October that likely pulled some sales forward plus price pressures and cold, stormy weather,” NRF chief economist Jack Kleinhenz said in a statement. “The pace of spending was choppy, and consumers may have pulled back more than we had hoped, but these numbers show that they navigated a challenging, inflation-driven environment reasonably well. The bottom line is that consumers are still engaged and shopping despite everything happening around them.”


Last year's holiday results beat the $889.3 billion spent during the 2021 holiday season. But they were slightly below the NRF’s forecast, released in early November, that 2022 holiday sales would increase between 6% and 8% over the prior year to between $942.6 billion and $960.4 billion. The 2022 gain compares with 4.9% average holiday sales growth over the prior decade, according to the NRF.


“The last two years of retail sales have been unprecedented, and no one ever thought it was sustainable,” Matthew Shay, NRF president and CEO, said in a statement. “Nonetheless, we closed out 2022 with impressive annual retail sales and a respectable holiday season despite historic levels of inflation and interest rate hikes to cool the economy. Consumers shopped in record numbers and retailers delivered positive holiday experiences to inflation-wary consumers."

Inflation and Discounting

NRF’s calculation of retail sales excludes car dealers, gas stations and restaurants to focus on core retail, and NRF defines the holiday season as Nov. 1 through Dec. 31. The holiday total, which is not adjusted for inflation, includes online and other nonstore sales, which were up 9.5% at $261.6 billion. NRF had forecast that the category would grow between 10% and 12% to between $262.8 billion and $267.6 billion. Online holiday sales were $238.9 billion in 2021.



Naveen Jaggi, JLL's president of Retail Advisory Services, weighed in on the 1.1% sales decline reflected in the federal monthly retail report for December. He cited data from analytics firm Placer.ai, which reported that shopping center foot traffic rose 40.3% for indoor malls in December when compared to November, with open-air lifestyle centers and outlet malls seeing month-over-month increases of 27.7% and 31.6%, respectively.


"Although retail foot traffic rose by double-digits in December for practically all categories, it wasn’t enough to counter the effects of inflation combined with deep discounting for the holidays," Jaggi said in a statement. "Inflation was up 6.5% from year-ago levels. While this is lower than the peaks seen mid-2022, it was enough to dampen consumer confidence heading into holiday shopping. Furthermore, food prices continue to climb, meaning consumers still had to devote more of their dollars to necessities rather than discretionary goods.


JLL’s 2022 Holiday Survey found that "many consumers planned to spend less and focus on deals, and this prediction appears to be accurate," Jaggi said.

Which Retailers Did Best

November-to-December holiday sales saw year-over-year gains in all but two of nine retail categories, led by online sales, grocery stores and general merchandise stores according to the NRF.


It found that:

  • Online and other nonstore sales were up 9.5%.

  • Grocery and beverage stores were up 7.8%.

  • General-merchandise stores were up 3.8%.

  • Sporting-goods stores were up 3.5%.

  • Health and personal care stores were up 2.8%.

  • Clothing and clothing accessory stores were up 2.2%.

  • Building materials and garden supply stores were up 1.5%.

  • Furniture and home furnishings stores were down 1.1%.

  • Electronics and appliance stores were down 5.7%.

Neil Saunders, managing director of GlobalData, in a note on Wednesday said that the holiday sales rise, while less than expected, was respectable.


"Even if growth was a little more subdued, retail sales ended the year on a positive note with a 5.3% increase in spending," he said. "Americans dug deep to celebrate the holidays, forking out some $37.7 billion more than they did last year. Of course, some of this was down to inflation and, when adjusted for price increases, volumes in December fell by around 0.6%. While unwelcome, this is a reasonable decline that is manageable by most retailers."


But he did voice concern that dips in retail spending now reflect a troubling trend.


"December growth was the slowest in 22 months," Saunders said. "It also means that growth has more than halved since August when it stood at a very robust 10.2%. Some of this is down to moderating inflation, but some is also a consequence of a more pressured and concerned consumer who has become more frugal about spending. ... At this stage, it is quite clear that the year ahead will be much tougher than the one that has just passed."

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