Christmas apparel spend benefited from colder weather

Christmas apparel spend benefited from colder weather

US retailers benefited from good Christmas sales growth in 2016 thanks to improved consumer optimism, with apparel benefiting from the colder weather and elevated discounting levels, analyst figures show.

According to Conlumino, 2016 was a good Christmas in terms of sales growth for retailers across the board, with overall spend up 3.8% on the prior year – the best total growth rate since 2011. This was slightly above the analysts' initial forecast of 3.4%, thanks in part to higher consumer confidence and solid rises in disposable income, which both increased the appetite to spend.

Spending growth at stores remained relatively stable, although the number of shoppers visiting physical stores dropped again in 2016, by 1.5% on the prior year. Despite this, those that did visit spent more per head which helped keep physical spend positive.

Online, however, now accounts for a much higher share of sales, with growth surging 17.1% – the highest rate of growth of the past ten years, according to Conlumino. Consumers seeking convenience, stronger online offers and propositions from retailers, and some compelling online deals all helped to drive online spend. 

Christmas apparel spend benefited from colder weather with a 7.3% increase in sales on the 2015 festive period and a 4.3 percentage point uplift in shopper share. Discounting also helped, although this presented a mixed picture. 

While the number of products discounted fell on the prior year – mostly a function of the more seasonal weather – discounting levels remain elevated and well above 2014 and 2013. However, the depth of discount increased slightly to just over 31%, reflecting the highly competitive environment in clothing. 

According to Conlumino, the uptick in consumer participation in Christmas shopping was due to a late surge in the last few days, higher confidence, and a calendar more conducive to shopping – a trend that contrasts with the more lacklustre participation in Black Friday shopping, it added.

Almost three-quarters of the 68 US retailers that were asked about their Christmas sales said they saw growth compared to the prior year, with 38% saying the growth rate was over 5%. Around 23% said they saw no growth or a shrink in sales, while 7% said sales had shrank by more than 5%. 

"Two of the factors which helped Christmas spend this year were the more optimistic views on both consumer finances and coping with the expense of the holiday season," the analysts add. "Not only did consumers enter the Christmas period in a positive frame of mind, this optimism strengthened since November, which created a relatively late rally in spending. Christmas finished with a flourish."