Surging online orders and last-minute shoppers helped retailers make up for a slow start to the holiday-shopping season, fueling hopes that higher wages, the rising stock market, and lower food and gas prices prompted Americans to spend more.
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Estimates from retail research firms suggest sales growth in the period -- which spans from Nov. 1 to the end of December -- could outpace that of recent years.
"American consumers are once again proving many of the pundits wrong, as shoppers flock both to websites and to stores -- and not just for returns," said Craig Johnson, president of Customer Growth Partners, a New Canaan, Conn.-based research firm. "They are shopping at a rate not seen since the mid-2000s."
The firm raised its holiday-sales growth forecast to 4.9% from an initial estimate of 4.1% growth. That pace, according to the firm, would be the fastest growth rate since a 6.1% increase in 2005. Customer Growth Partners' forecasts -- which excludes auto, car parts, fuel and restaurant sales -- are based on a weekly in-house survey of retailers across the country combined with broader economic indicators and historical data.
Mastercard's SpendingPulse survey found that total retail sales, excluding automobile and gas sales, rose 4% from Nov. 1 to Dec. 24, though its results found that the days preceding Christmas were weaker than expected. The survey highlighted men's apparel and home furnishings as strong points, while jewelry sales fell from a year ago.
The year-end retail blitz coincided with new signs of shoppers' improving health. Consumer confidence levels for December rose to the highest level since August 2001 amid improving expectations for job growth and rising incomes in the months ahead, the Conference Board, a research firm, said Tuesday. Wages have been rising by 2.5% from a year earlier and U.S. joblessness fell to its lowest level in nine years in November, according to the Labor Department.
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The projections, while based on separate data and surveys, are slightly ahead of the National Retail Federation's forecast for 3.6% increase in holiday spending for the period. Last year, sales for the period increased by 3.2%, according to the trade group.
Still, the sales growth may not have been shared equally among all retailers, many of which relied on deep discounts to lure shoppers. Customer Growth Partners warned of continued weakness at department stores, which are struggling to attract shoppers, while the drop in food prices will likely ding sales at retailers like Wal-Mart Stores Inc. and Costco Wholesale Corp.
Online sales continued to increase at a rapid clip. Mastercard forecast a 19% jump in online sales for the holiday period, while Customer Growth Partners expects a 15% gain.
That surge came at the expense of physical stores, which have lost shoppers to online rivals for years. RetailNext Inc. a brick-and-mortar retail analytic firm, said net sales at traditional stores fell by 10% from a year earlier during December, with shopper traffic plunging nearly 15%. Those results were partially buoyed by a burst of spending in the final days before Christmas, when sales rose 6.5%, according to RetailNext.
Melanie Kerton of Kansas City, Mo. did most of the Christmas shopping for her family -- including two children -- online.
"I'm kind of anti-crowds," said Ms. Kerton, 38, who works in an elementary school office. She was able to avoid stores for the most part, up until the last week before Christmas. Then, to finish up her shopping list, she braved the crowds and visited a few stores, including Dick's Sporting Goods, Buckle and Kohl's.
"That was the one day I thought I was going to get it done, no matter how miserable I feel about it," she said , noting that her spending this year was roughly equal to last year.
RetailNext said that the average shopper shelled out nearly 11% more during the week before Christmas, offsetting a 3.9% decline in store traffic. Once the shoppers do come into stores, they do tend to buy more frequently and spend more, said Shelley E. Kohan, RetailNext vice president of retail consulting.
Web retailers made a push for the last-minute shoppers too. Amazon.com, through its Prime Now service that delivers orders in as little as an hour, had pledged to take orders as late as 9:45 p.m. on Christmas Eve in some markets.
Retailers appear to be managing the online surge better than in prior years. Nearly all the 32 retailers surveyed by the consultancy Kurt Salmon said they managed to process all online orders placed by the last day they guaranteed for Christmas delivery, up from 95% in 2015 and 87% the year before. Part of that was better managing expectations, as at least 20% of retailers moved their deadlines up to have more time to deliver packages by Dec. 25.
In a sign of the surge of online shopping, United Parcel Service Inc. said it expected to ship 14% more packages this year than last, more than 700 million in total, a record level by volume. FedEx Corp. plan a 10% bump.
But peak season for the carriers isn't over yet: UPS said it plans to ship 5.8 million packages back to retailers in the first week of January, as consumers send back unwanted items.