As the holidays approach, retailers have reason to feel optimistic: Total US retail sales grew 11% year over year in October, marking the third straight month of double-digit growth. Categories that suffered during the pandemic, such as apparel and electronics, are performing especially well as they experience unleashed pent-up consumer demand.
Rapidly rising inflation continues to be a major factor, propelling nominal sales across categories. The Consumer Price Index is up 6.2% over last year overall, jumping even higher in categories such as furniture, sporting goods, and computer hardware. But even when adjusting for inflation, growth remains robust at around 5%, which is more than double the 2010 to 2019 October average.
Consumers seem to be waiting until November and December to do the bulk of their shopping, further supporting our forecast for strong holiday sales. While supply chain challenges and the desire to smooth the holiday demand bump prompted many retailers to begin seasonal promotions earlier this year, October sales did not show an inflection in growth.
Where will shoppers spend this season? Brick-and-mortar stores continue to see remarkable momentum as more consumers return to stores. Our research suggests that US consumers will soon turn to online shopping, however, fueling a comeback in nonstore sales growth. According to a Bain survey conducted in partnership with ROI Rocket, 77% plan to do at least some of their holiday shopping online, with 23% planning to shop online exclusively.