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US retail sales in December 2018 totaled a seasonally adjusted $505.8 billion, falling 1.2% from November 2018, according to a reportfrom the US Census Bureau.
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This represents the biggest drop since 2009, The Wall Street Journal reports. It was also a poor performance on a year-over-year (YoY) basis, as December 2018’s sales rose just 2.3% YoY, while November and October 2018 jumped 4.1% YoY and 3.7% YoY, respectively. Sales decreased YoY in most categories and, considering 2018’s full-year growth in retail was 5%, December’s performance was particularly underwhelming.
E-commerce wasn’t able to buck the industry trend, turning in a poor performance as well. The nonstore sales segment, which includes e-commerce, saw its month-to-month growth hit -3.9%, significantly worse than the industry overall.
And its YoY growth came in at 3.7% in December, which is better than the rest of retail, but marks a significant deceleration as the segment grew 11.1% YoY in November and 8.4% YoY the month prior. So, even though e-commerce is growing faster than retail generally — it was up 9.6% for all of 2018 — it was part of retail’s overall problem in December.
Low December sales will hurt retailers that rely heavily on the holiday season. Some retailers count on the last two months of the year to bring in a large share of their annual sales, and December coming up short can be problematic for them.
Less revenue from the holidays could lead to closings, bankruptcies, and more for physical retailers, while e-tailers may find themselves in financial struggles as well. It’s possible that the growing popularity of sales holidays in November, such as Black Friday and Cyber Monday, is moving more sales into November, meaning that retailers aren’t losing them.
But in 2018, November and December accounted for approximately 18.1% of the full year’s retail sales, and in 2017 they made up nearly 18.5%, so the holidays may still have been a bit underwhelming this year.
Sliding sales in December give more credence to projections that see a down year, and possibly even a recession, for retail in 2019.The National Retail Federation (NRF) forecasts retail sales growth to decelerate in 2019, ending a two-year trend of rising sales growth.
Meanwhile, some believe the US economy is likely to see a recession this year. And poor sales in December suggest that these negative projections may prove accurate. If retail sales continue to struggle, and the trade war between the US and China isn’t deescalated in the near future, 2019 could prove to be a very difficult year for retail.
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Source: Business Insider – dkeyes@businessinsider.com (Daniel Keyes)