US Retail Sales Fell Below Predictions

John Krautzel
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U.S. retail sales fell below the anticipated 0.3 percent rise in October 2015. The actual 0.1 percent climb has retailers wondering what to anticipate during the 2015 holiday shopping season. A steep general increase in consumer spending between February and October led to a 3.7 percent prediction for holiday retail sales growth by the National Retail Federation. Do the lackluster October numbers indicate a problem? Here are some factors to consider.

Core Retail Spending

Core retail spending is the portion of consumer spending that doesn't include gasoline, vehicles, building materials and food services. Excluding these less stable purchase categories provides a number that more closely relates to the actual amount consumers are regularly spending on retail products. Core retail spending was up 0.1 percent in September and 0.2 percent in October. Although still below predictions, the increase shows a willingness to spend on the part of American consumers.

Sales by Sector

Lower gasoline prices have led to a 4 percent drop in retail sales at service stations for October. Although consumers are saving money in that area, retail sales in other sectors have not shown a corresponding proportional growth. Clothing sales stayed even in October, while sales at furniture stores and hobby stores grew a modest 0.4 percent. Restaurants and bars saw a 0.5 percent increase, and sales at garden and building material stores rose 0.9 percent. Sales at electronics and appliance stores dropped by 0.4 percent.

Online Shopping

Online shopping sales revenue grew by 1.4 percent in October, and the NRF predicts an even larger growth of 6 to 8 percent in this area during the November to December holiday shopping season. Forrester Research predicts an even larger growth of 11 percent. Following 2014's phenomenal 12 percent increase in online sales during November and December, online retailers anticipate a similar strong finish to 2015, and everyone from big box stores to small local businesses is looking to increase their online presence as a way to boost their end-of-the-year sales totals.

Christmas Creep

Christmas creep refers to annual increases in sales during September and October from shoppers doing their holiday shopping early. With sales numbers staying even in September and only showing a 0.1 increase in October, it appears there was little Christmas creep in 2015. This delay in growth could correspond with higher increases in November and December, or it could simply show that consumers are going to spend less in general as the year draws to a close.

Following a lower than anticipated growth in sales for October 2015, economists predict conservative growth for the rest of the year. Focus on online and mobile shopping to boost end-of-the-year totals. Although retail sales usually make up about 10 percent of all sales, that number traditionally grows to 15 percent during the holiday season. Take advantage of this growth by increasing your online presence and developing consumer-friendly mobile applications.

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