US retailers are celebrating after a holiday sales surge that defied expectations.

The latest data from the National Retail Federation indicates sales during the November-December holiday season grew 8.3 per cent over the same period in 2019 to $789.4 billion, despite the tough conditions of Covid-19.

Here’s an insight into the spending trends that drove that unexpected sales increase.

Well above previous years

Prior to the holiday period, forecasters had been cautious in their expectations for the season of giving, noting tough economic conditions and the year of Covid could have a major impact on sales.

Consumers defied these expectations, however, with the NRF noting they kicked up a gear in December, most likely as a result of government stimulus.

“There was a massive boost to most consumer wallets this season,” NRF Chief Economist Jack Kleinhenz said.

“Consumers were able to splurge on holiday gifts because of increased money in their bank accounts from the stimulus payments they received earlier in the year and the money they saved by not travelling, dining out or attending entertainment events. Some families are still struggling, as are some retail sectors.

“But the promise of a new round of stimulus checks after a deal was struck before Christmas helped increase consumer confidence.

“Consumers were also encouraged by the news of COVID-19 vaccines becoming available, which helped offset concerns about increased infection rates and state restrictions on activity.”

As a result, spending surged to 8.3 per cent above the same period in 2019 and was more than double the 3.5 percent average holiday increase over the previous five years, including 2019’s 4 per cent gain.

An online emphasis

As expected, much of the holiday season spend transferred online, with online retail increasing 23 per cent to $209 billion.

However, there was also a spike in purchasing in the third and fourth week of December after it was too late to expect delivery of online purchases by Christmas.

The NRF noted consumers worked around this by taking advantage of services like Buy Online Pick-up In-Store (BOPIS) and via quick in-and-out trips to physical retailers.

What people were buying

Some retail verticals performed better than others throughout the holiday season, with sectors like home improvement performing particularly well.

The NRF noted winners and losers of the spending surge were:

• Building materials and garden supply stores, up 19 per cent

• Sporting goods stores, up 15.2 per cent

• Grocery and beverage stores, up 9.6 per cent

• Health and personal care stores, up 5.4 per cent

• Furniture and home furnishings stores, up 2.2 per cent

• General merchandise stores, down 0.1 per cent

• Electronics and appliance stores, down 14.4 per cent

• Clothing and clothing accessory stores, down 14.9 per cent

The takeaway

The NRF explained despite unprecedented challenges in the holiday season of 2020, both consumers and retailers demonstrated “incredible resilience”.

“Faced with the rising transmission of the virus, state restrictions on retailers and heightened political and economic uncertainty, consumers chose to spend on gifts that lifted the spirits of their families and friends and provided a sense of normalcy given the challenging year,” NRF President and CEO Matthew Shay stated.

Future optimism

Now as America looks to a new government and a new year ahead, the National Retail Federation is expressing cautious optimism.

“We believe President-elect Biden’s stimulus proposal, with direct payments to families and individuals, further aid for small businesses and tools to keep businesses open, will keep the economy growing,” Mr Shay said.

The top 10 spending days

According to the National Retail Federation, this year’s holiday spending is set to hit a high, totaling between $727.9 billion and $730.7 billion in 2019.

The peak period traditionally kicks off with the Black Friday sales and then extends all the way to December 31.

Meanwhile, Loss Prevention Media notes eight of those busiest retail days are yet to come in December, with this Saturday, December 7 ranking 10^th on the list of busiest shopping days of the year.

In descending order, they report the following dates fall in the top 10:

• Number 1 – Black Friday on November 29
• Number 2 – Super Saturday on December 21, just before Christmas
• Number 3 – Boxing Day on December 26, the day after Christmas
• Number 4 – Saturday, December 14, two Saturdays before Christmas
• Number 5 – Saturday, November 30, the day after Black Friday
• Number 6 – Sunday, December 22, the last Sunday before Christmas
• Number 7 – Monday, December 23, just before Christmas
• Number 8 – Saturday, December 28, just after Christmas
• Number 9 – Friday, December 27, just after Christmas
• Number 10 – Saturday, December 7, first Saturday in December

Together, these days are predicted to account for 42 per cent of all foot traffic throughout the holiday period.

Thanksgiving preliminary figures

Black Friday traditionally ranks as the busiest shopping day for retailers, with the NRF recently noting an estimated 165.3 million people were expected to shop between Thanksgiving Day and Cyber Monday.

This year, preliminary figures indicate foot traffic on Thanksgiving and Black Friday may have been slightly down on 2018 by around three per cent.

The figures further indicate, many people got in early with a 2.3 per cent rise in shoppers on Thanksgiving, but a 6.2 per cent decline in foot traffic on Black Friday.

And, a couple of trends also emerged, including the fact the lines between online and bricks and mortar continued to merge with Buy Online, Pick Up In Store (BOPIS) surging in popularity.

BOPIS shoppers to purchase online during sales periods but pick up at the retail outlet when crowds aren’t as prevalent.

Preparing for the busy days to come

With eight of the 10 busiest shopping days still yet to come, retailers can rest assured there is still ample opportunity for consumer spending.

To maximise the expected profits retailers should:

• Ensure their loss prevention and in-store security is up to par, utilising features such as Electronic Article Surveillance, CCTV, bag checks and loss prevention personnel
• Double check their stock levels and incoming orders to accommodate expected peak shopping days
• Educate staff on the increased likelihood of theft over the peak shopping period
• Sufficiently staff stores for busy periods and ensure they are adequately trained in both customer service and store procedures such as handling returns, managing BOPIS, and maintaining best practice in loss prevention
• Audit their omnichannel offering to ensure a frictionless customer experience across all mediums
• Track trends including foot traffic, sales data and popular products to gain an insight into immediate product demand and availability and to have a better understanding of what’s likely to occur next year

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