November’s sales gains have provided a firm start to the holiday season

November’s sales gains have provided a firm start to the holiday season

Holiday hopes continue to remain high after major US retailers saw a strong surge in November sales, with a Black Friday boost helping accelerate momentum already gained so far this year.

Sharper increases in key holiday categories like apparel were helped by a raft of sales promotions, which began early in the month as firms tried to persuade early spenders to open their purses. Longer opening hours also helped drive traffic during the Thanksgiving weekend.

There was also a release of some pent-up apparel demand, with colder and wetter weather helping to drive sales of outerwear, sweaters and fleeces.

"Industry sales generally did well in November, building on the positive momentum first observed in September that carried through the early fall," noted Michael McNamara, vice president, research and analysis for MasterCard Advisors SpendingPulse.

"The November retail sales gains indicate a solid start to the 2010 holiday season for most categories, with some recording significant year-over-year gains."

Indeed, apparel led the way, with November retail sales up 9.6% year-on-year, taking the sector to its eighth month of gains so far in 2010. The biggest advances were seen in footwear and children's apparel according to SpendingPulse, which tracks retail sales across all payment forms.

Abercrombie & Fitch, Target, Macy's, Kohl's, Nordstrom, JC Penney, The Buckle, Wet Seal, Limited Brands and Gap Inc were among those who surpassed estimates - contributing to the $45bn in sales estimated by the National Retail Federation over the four-day Thanksgiving weekend.

The positive performance also came against tougher comparisons with the year-ago period, when sales started to improve following the worst months of the downturn,

In total, the NRF expects holiday retail sales to be up 2.3% to $447.1bn - a marked improvement on last year's barely-there 0.4% uptick and the 3.9% drop the industry saw in 2008.

While the holiday results are an important gauge of people's willingness to spend, and so far seem to be boding well for the three weeks leading up to Christmas, the reality is that the Thanksgiving weekend represents just 10% of total holiday shopping volume.

And Black Friday itself is responsible for just 5-6% of total November retail sales, according to SpendingPulse's McNamara.

"Sales tactics that have been developed over the past several years have been increasingly effective at driving sales to make it an almost $19bn day, " he says. "But it is becoming harder to post significant year-over-year growth rates for total sales on that specific day.

"This year, a number of factors such as earlier online and brick-and-mortar promotions may have further diluted the importance of the day itself, distributing sales over a longer period of time."

There are also fears that the already-steep discounts that have encouraged shoppers to spend will need to continue if retailers want to drive customer traffic in December.

And this could pressure profit margins, which are already vulnerable after many retailers elevated their inventories ahead of the holidays.