November Retail Spending Growth Reflects Later Holiday Timing

By Jonathan Silver, Chief Executive Officer, Affinity Solutions

Despite the October uptick, the durable goods sector declined as the holiday season progressed. Furniture and Home Furnishings fell by 1.15% YoY and 0.80% MoM in November, a common trend during Black Friday as deeper discounts are typically offered on holidays like Labor Day or Memorial Day.

Building and Garden Supplies also declined, down 2.93% YoY and 2.19% MoM. The yearly decline may be due in part to increased spending in this category in November 2023 from extreme weather events earlier, and this category tends to perform better in warmer months when people are actively working on home projects or gardening. However, we may see more spending in the coming months with more extreme winter weather patterns and consumers preparing for potential storms.

Electronics and Appliances saw a more surprising decline, dropping 7.28% YoY and 2.19% MoM. This is likely due to a very late Thanksgiving pushing Cyber Week into December along with the downward trend electronics has been experiencing throughout 2024. Best Buy recently reported another drop in quarterly sales and with the uncertainty surrounding the impact of possible new tariffs, this category could remain volatile. Others, like Mastercard, suggest a more positive projection estimating a 6.7% YoY increase in electronics spending this season, driven by stabilizing prices and high demand for newer technology, like smart home devices, gaming consoles, and wearable tech.

In November 2024, the Food Service and Grocery Sectors continued to grow with restaurant spending increasing 7.34% YoY and 1.67% MoM and grocery store spending increasing 5.31% YoY and 0.95% MoM.

Interestingly, food prices in the U.S. rose by 2.1% over the past year and food-at-home prices are still 25% higher than pre-pandemic levels. Given that this is an essential good, consumers have been forced to navigate stubbornly high food prices, but there’s reason for optimism. The price of some food items including some dairy products, cereals and bread, and processed fruits and vegetables fell in November. Online grocery prices actually dipped by 0.1%, helping to easing in grocery costs in the new year.

Even with grocery prices leveling out, 58% of US households said they were “extremely concerned” about inflation in November, and nearly 7 in 10 shoppers said they have been looking for sales and coupons more often over the past year.

As a result, grocers and restaurants should continue to focus on providing value to keep customers and win new ones. In addition to coupons, this could be in form of value meals, loyalty rewards, or other special discounts that appeal to customers’ tastes as well as their wallets.

Another staple that continues to shine is Clothing and Accessories with a 20-month streak of gains. November saw a 4.21% increase in YoY spending while MoM fell sightly by 0.18%. Despite this dip, the outlook remains strong as the holiday season moves into December. According to the NRF, clothing and accessories will be among the most popular holiday gifts this year, with 49% of shoppers requesting these items, second only to gift cards.

The impact of the shortened holiday season remains unclear but the fact that many retailers began sales earlier, combined with the gains we saw in November, is encouraging. Most people finish their holiday shopping in December, often purchasing their final gifts in the week leading up to December 25. Apparel retailers should continue to focus on driving sales through the new year with deals and steals across online and in-store, as more and more customers put convenience at a premium.

The NRF forecasts record holiday spending in November and December, projecting growth between 2.5% and 3.5% over 2023, reaching between $979.5 billion and $989 billion. With Cyber Monday included in December's figures, we anticipate even greater growth this month.

Looking ahead to the new year, President Trump's plans to extend and introduce new tax cuts could widen the federal deficit and put pressure on borrowing costs, but the Fed’s actions in response to lowered inflation should keep interest rates in check. We will have to keep an eye on some of the proposed tariffs, which could challenge U.S. manufacturers and create some inflationary pressures. These economic dynamics will continue shaping the retail landscape and the broader economic outlook, creating both opportunities and challenges and for retailers.

Looking further out, the next shortened holiday season is six years away and will be preceded by the longest holiday in 2029 when Thanksgiving falls on November 22 (the earliest possible day)!