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Holiday Shopping Falls Short as Retail Sales Drop in November

  • U.S. retail sales fall 1.1 percent, but are up 4.1 percent on an annual basis
  • Decline is a concerning sign for retailers who are banking on strong holiday sales to carry them through to the new year
  • Sharp reductions in spending at department stores and restaurants

Retail sales in the United States were down in November and revised figures show that sales fell in October instead of rising slightly, according to data from the Commerce Department. The drop in sales marks the end of a steady increase in retail sales since the start of the COVID-19 pandemic, and could be a concerning sign for retailers who are hoping for strong holiday sales to carry them into the new year.

November’s retail sales were down 1.1 percent from October, the largest decrease in seven months, although they were up 4.1 percent from November 2019. While October’s figures originally showed a 0.3 percent increase in sales, revised figures show that they were down 0.1 percent.

Department stores experienced one of the most precipitous declines, with sales down 7.7 percent. Clothing sales were down 6.8 percent, and 16.1 percent annually. Sales at restaurants fell by 4 percent, and were 17.2 percent lower than in November 2019. Electronics, furniture, and car sales also fell, while sales of groceries and building materials increased.

Retail sales experienced a precipitous drop in the spring as the COVID-19 pandemic forced business lockdowns, but sales quickly recovered in the summer and have stayed above 2019 levels. While economists expected that November’s retail sales would be lower due to a slowdown in the nation’s economic recovery, they had anticipated that holiday sales would make it a milder drop.

This year’s holiday shopping season has been a more uncertain time for retailers, as many businesses urged people to start their shopping early. This strategy intended to boost retailers fourth-quarter earnings while ensuring that customers’ orders would not be held up by shipping delays. Black Friday doorbuster sales were absent this year due to a third wave of COVID-19 infections, with many consumers going online to do their shopping.

The pandemic forced many consumers to cancel vacations and other spending, freeing up money that they might decide to put toward holiday spending. However, more people are also facing unemployment and economic uncertainty, and have less spending power after the expiration of supplemental unemployment benefits. The National Retail Federation determined that the average shopper spent 14 percent less between Black Friday and Cyber Monday than they did in 2019, with other forecasts also suggesting that consumers are spending less this season.

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