Retail Sales Disappoint After Blockbuster Black Friday

Retail sales cooled last month despite a blockbuster kickoff to the holiday shopping season on Black Friday and Cyber Monday, with spending down across most major categories.

Consumers appeared to be reserving discretionary buys for promotional events, according to Marcus & Millichap researchers, with overall retail sales dropping 0.6%, per Census Bureau data.

“This is significant, considering purchasing was up 12 percent year-over-year on Black Friday, and a record $11.3 billion was spent on Cyber Monday,” the firm notes in a new research brief. “Higher sales volumes were registered during these promotional events, but the overall decline in monthly retail sales suggests many consumers curtailed their discretionary spending during the rest of the month.”

Marcus & Millichap did note that this behavior is contributing to a slower pace of inflation, as November consumer prices were up just 0.1 percent on a monthly basis, the lowest increase this year.

In addition, experts say November’s monthly decline was broad-based, meaning it affected most categories of retail spending.

“The retail sales control group, which excludes several volatile categories and goes into the calculation of nominal GDP, fell 0.2% after a 0.5% increase in October, which was revised down from 0.7% in the prior release,” said Bill Adams, chief economist for Comerica Bank, in an emailed note. “Retail sales rose 1.3% in October, though, so the change from September to November is equivalent to a 0.3% monthly increase.”

Interestingly, a record 158 million people are estimated to have shopped on Super Saturday, the last Saturday before Christmas, on December 17. But it’s likely many were relying on credit cards, not savings, which is at a 17-year low. Marcus & Millichap experts predict that behavior, coupled with higher interest rates, will push average US credit card debt beyond the high $8,900 set in September.

The bright spot? Restaurant sales, which rose 09% in November. Restaurant and bar sales increased by 14.1% year over year last month, despite a 8.5% increase in the price of food away from home.

Overall, while the decline in spending may suggest a softening consumer environment, Marcus & Millichap researchers say retail properties are “generally in a good position” to weather the storm.

“Nationally, operations are back to pre-pandemic levels, which will allow vacancy to remain historically low, should a moderate increase in availability occur next year. Additionally, retail stock is expected to increase by just 0.5 percent, limiting competition for properties with available space,” the report notes.