Ecommerce gains show challenge to post-holiday outlook

The ecommerce impact on the strong holiday is clearer in the latest retail data: In-store holiday sales improved despite the strongest ecommerce gains in six years.

The data also give a sign—albeit mixed—of a January letup from the holiday gains, which were revised downward a bit in the government-reported numbers.

The persisting strength of ecommerce sales amid the moderating spending confidence of consumers likely means that a return to less robust spending—especially in stores—will become clearer as 2018 unfolds.

Here is more on what the latest retail numbers say—as supported by the accompanying charts:

  • Trend through holidays. The evidence of a January letup was focused in seasonally adjusted growth (+3.8%), which was down from growth between 5.0% to 5.6% during the November-December holiday period for sales excluding autos, fuel, and restaurants. See the originally reported holiday results here.
  • Signs of letup. The sign of a January letup—reinforced by the downward revision to the holiday focused in December results—is consistent with the predictions of a post-holiday return to less robust spending. This is based on trends in spending confidence that emerged before the recent stock market falloff. See the recent confidence post here.
  • Holiday ecommerce vs in store. Ecommerce sales were up between 16.9% to 18.3% (in unadjusted and seasonally adjusted terms), which was the strongest holiday growth since 2011. Despite the ecommerce strength, in-store sales still managed stronger holiday gains of 3.0% to 3.8%. This was the best brick and mortar holiday growth since 2014.
  • Trends by store type. The homegoods channels—especially home improvement stores—have led the improved performance of store sales across all types of stores. Apparel and department stores remain the laggard, but have still managed slight gains through the holiday that are better than their flat pre-holiday pace of growth.
  • Annual trend. Despite the strong finish to 2017, retail performance for the year was lackluster outside of ecommerce sales. Overall retail sales (unadjusted excluding autos, fuel, and restaurants), grew 3.8% in 2017, which was just a tick better than 2016. In-store sales slowed slightly to 2.2% annual growth. Ecommerce sales accelerated to 16.0% growth, which was the strongest annual growth since 2011.

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