The consumer held on for the holidays, driving stronger-than-expected gains in December.
But it wasn’t quite enough to make 2023 anything more than meh for fashion retailers, with specialty stores posting modest gains for the year and department stores logging declines.
December retail and food service sales rose 5.6 percent from a year earlier, the Census Bureau said, outpacing inflation of 3.4 percent.
That was stronger than what was expected by economists, who have routinely underestimated the staying power of consumers over the past year. On a seasonally adjusted basis — comparing December with November — sales rose 0.6 percent, ahead of the 0.4 percent projected by economists, according to FactSet.
“Consumers pulled out all the stops to enjoy themselves over the holiday period,” said Neil Saunders, managing director of GlobalData, in an analysis.
But that could come at a cost.
“We estimate that credit card balances increased by $55.6 billion in December over the same period a year ago,” Saunders said. “On top of this, buy now, pay later played a much bigger role this holiday season than ever before. Some of these balances will be paid down, but many will not, which leaves consumers with something of a financial hangover as they enter 2024.”
The major fashion retailing categories were split for December. Sales at apparel and accessories increased 4.3 percent from a year earlier while department stores logged a 2.7 percent decline.
And nonstore retailers, a category that includes all types goods and is dominated by e-commerce, saw a 9.7 percent gain.
All of that is in keeping with the trends seen throughout a very mixed up 2023.
The year started with fears of recession, but was defined by consumer resilience — leaving fashion with both a bit of whiplash and a sense of relief.
To get a better handle on the year and where people were spending their money, here’s an annotated reading of the 2023 sales data in Wednesday’s report.
Retail and food service sales: +3.2 percent to $8.3 trillion
Sales last year were held back by steep declines in categories that previously gained from nesting impulse that took hold during the pandemic. Furniture and home furnishing store sales fell 5.4 percent while building material and garden supply stores were off 3 percent. High interest rates hurt home-related sales, but helped bring the Consumer Price Index down to a 3.4 percent gain for the year — still it was an increase retail couldn’t quite keep up with.
Department stores: -2.7 percent to $133 billion
All the talk from brands about wanting to go direct-to-consumer showed up very clearly in the department stores’ sales results. Macy’s Inc. — the largest player in the space — forecast its comparable sales would fall by 6 percent to 7 percent for its fiscal year. And it’s working to turn around the trend at a time of change. Next month, Tony Spring is set to become chief executive officer of Macy’s.
Apparel and accessories specialty stores: +1.6 percent to $313 billion
Speciality stores surpassed department stores in sales in 2006 and haven’t looked back. There’s still a mix of winners and losers in the category, but many of the company’s gaining ground have familiar names. Lululemon Athletica Inc., Abercrombie & Fitch Co. and American Eagle Outfitters Inc. all came out of last year’s holiday season with higher outlooks and a sense of momentum.
Nonstore retailers: +8 percent to $1.4 trillion
The real consumer market share gains are still happening online — including through the e-commerce operations of the traditional retail set. Online sales growth has taken a step back from the go-go days of the pandemic when many shoppers were bored, stuck at home and logged on, but the sector is continuing to outperform. For retail, it’s still a question of how to make money out of digital sales given the cost of returns and the competitive dynamic of the endless aisle.
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