The holiday shopping season was off to a sluggish start in November as retail sales fell 1.1% compared to October, the Commerce Department reported on Wednesday. It was the biggest drop in seven months and well below analysts’ estimates of a modest gain.
Retailers were hoping for a strong holiday season to help carry them through to the other side of the pandemic as a coronavirus vaccine is distributed amid a resurgence in cases. Sales at clothing and department stores, for example, were hit hard, falling by 6.8% and 7.7% from October.
The strongest performing sectors were food and beverage, up 1.6% on the month, and building materials, up 1.1% – two areas that have held up throughout the pandemic. The data suggests that there has not been a significant change in the habits of consumers as they continue to focus on their lives at home.
While holiday sales can still recover, the recent rise in coronavirus cases, coupled with renewed restrictions on businesses, most likely mean that the holiday season will not be the springboard that retailers were hoping for.
The bright spot continues to be strength in e-commerce sales. Nonstore retailers are up 30% on a year-over-year basis. Those retailers with a strong digital platform have performed well and are likely to be in a position to thrive in the post-pandemic retail ecosystem.
For more information on how the coronavirus is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.
