After a rocky start to the holiday shopping season, U.S. retailers benefited from cheaper gas prices and an improving job market in the weeks leading up to Christmas, raising optimism that sales had reached a three-year high.
Customer Growth Partners President Craig Johnson, who tracks the retail industry, now expects holiday sales to grow about 3.9 percent, a faster clip than he had previously projected as his “base case.”
The biggest payroll gains since 1999 and the lowest gasoline prices in five years are prompting consumers to spend more liberally. The decline in gas prices could free up $3 billion in holiday spending, Johnson said. That may help retailers recover from a lackluster kickoff to the season.
Sales between Thanksgiving and Christmas rose 5.5 percent, according to MasterCard Advisors, with jewelry and women’s clothing the strongest categories. Johnson’s research showed that this season was the best in years for consumer electronics and toys, helped by products like Apple’s iPhone 6 and dolls from the Disney movie “Frozen.”
The National Retail Federation has predicted that sales in November and December would gain 4.1 percent, the biggest increase since 2011. Holiday sales had climbed 3.1 percent last year, when severe winter storms kept shoppers home at the end of the season.
Slower sales and foot traffic during the Thanksgiving weekend had stoked fears that this holiday season would be a disappointment as well. Spending tumbled an estimated 11 percent over the so-called Black Friday weekend from a year earlier, the Washington-based NRF said. And more than 6 million shoppers who had been expected to hit stores never showed up.
In the end, discounts helped lure shoppers – even if they squeezed retailers’ profit margins. Retail chains held sales throughout the season, rather than just concentrating on the Black Friday weekend.
E-commerce sellers also flooded consumers with deals.
The biggest gain in discounts was for televisions, with the average discount jumping 259 percent from $110.93 to $398.67. Berg said with new 4K and curved televisions on the market, there was price pressure on other models.
“They knew the more they could throw at people, the better they would do,” said Doug Berg, TrackIF.com’s chief executive officer.