October retail sales, excluding automobiles, gasoline stations and restaurants, rose 0.4% from September and 5.6% year over year, as online and other non-store sales rose 13.9% unadjusted year-over-year and 0.4% seasonally adjusted from September, according to the National Retail Federation. The rebound came in part from delayed spending associated with early fall hurricanes, according to NRF Chief Economist Jack Kleinhenz.
Clothing and accessories stores sales were up 4.7% unadjusted year-over-year and up 0.5% seasonally adjusted from September; general merchandise sales rose 3.4% unadjusted year-over-year and up 0.5% seasonally adjusted from September; furniture and home furnishings stores sales rose 3.2% unadjusted year-over-year but fell 0.3% seasonally adjusted from September; and electronics and appliance stores sales rose 2.4% unadjusted year-over-year and 0.7% seasonally adjusted from September, according to the NRF.
The report comes on the heels of the U.S. Commerce Department’s own October sales report finding that core retail sales (excluding motor vehicle and parts and gasoline stations) were up 0.3% from September 2018, and 4.7% year over year, with non-store (mostly e-commerce) sales rising 0.4% from September and 12.1% year over year.
All eyes are on October retail sales as an important barometer of the holiday retail season, and things look good.
Stripping out sales like autos and gasoline took some of the wind out of the month’s numbers. Without those big-ticket and staple items (fuel sales notch gains largely on price spikes), general merchandise and e-commerce retailers in particular saw modest sales growth, noted Wells Fargo Senior Economist Tim Quinlan.
“While core sales appear to be moderating, we note the 0.3% gain in October is still in line with the average monthly gain seen throughout this cycle, but lower than earlier this year,” he said in comments emailed to Retail Dive. “As this sales group feeds directly into the Bureau of Economic Analysis’ calculation of personal consumption expenditures, October sales point to a still-strong but less robust pace of spending in the final quarter of the year.”
High levels of consumer confidence and wage gains are helping drive spending, even as gas prices have risen, according to GlobalData Managing Director Neil Saunders. “This dynamic is broad-based, with almost all income groups willing and able to spend more,” he said in comments emailed to Retail Dive.
That’s seen in what he called “one of the telling signs of elevated consumer confidence,” the willingness to splurge. “On this front, our own data suggest that consumers are still splashing out on treats for themselves in categories like apparel and beauty. This, along with a colder snap of weather, is why sales at clothing stores rose by a solid 4.7% in October.”
All that bodes well for the holidays, but retailers should expect some of the jubilance to ebb after the fourth quarter. “This morning’s release confirms our expectations of a strong holiday season,” according to Wells Fargo’s Quinlan. “But, as the calendar flips to 2019, we expect a further moderation in spending, as the boost from tax cuts will start to fade for consumers and amid rising prices and tighter monetary policy.”
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