RETAILERS AND THE TERRIBLE, HORRIBLE, NOT BAD, PRETTY GOOD HOLIDAYS / THE WALL STREET JOURNAL

Retailers and the Terrible, Horrible, Not Bad, Pretty Good Holidays

Compared with the past two seasons, retailers are suffering—but not by all measures

By Justin Lahart

This holiday season might bestow stores with more sales than expected./ PHOTO: EDUARDO MUNOZ/REUTERS

Cue up the Grinch jokes.

The Commerce Department on Thursday reported November retail sales figures, and to say they were disappointing would be an understatement. 

Overall sales fell a seasonally adjusted 0.6% from October—worse than the 0.3% drop that economists polled by The Wall Street Journal had expected—with most categories registering declines. 

The holiday shopping season kicked off on a downbeat note.

There are, however, some caveats you can throw in here if you want to feel better. 

One is that Tuesday’s Labor Department inflation report showed that consumer-goods prices fell 0.5% in November, so the actual amount of stuff people bought might not have fallen so much. 

Another is that an early Thanksgiving might have made people feel less urgency to go shopping on Black Friday—and although the Commerce Department’s seasonal adjustment process accounts for holidays, movable feasts can be tricky.

Still, retailers must be feeling down, especially when they think back on the past two holiday shopping seasons, which were especially strong.

But here is the thing: Even though they have bought a ton of stuff since the Covid crisis struck, even though they are shifting more of their spending toward services such as travel and dining out, and even though the Federal Reserve’s rate increases are starting to bite, Americans are still doing lots of shopping. 

Excluding car and car-part dealers and food service and drinking places, sales were 35% higher in November than they were three years earlier. 

In November 2019, they were about 13% above their three-year earlier mark.

And yes, inflation has a lot to do with the retailers’ outsize sales relative to before the pandemic. 

But it doesn’t have everything to do with it. 

Separate figures from the Commerce Department, which inflation-adjusts sales for the goods that retailers sell, show that in October, sales excluding car and car-part dealers and food service and drinking places were 20% higher than those three years earlier. 

In October 2019, they were up 12% compared with three years earlier.

This counts as cold comfort for any retailer that over-ordered in expectation of a better holiday season and is now sitting on more inventory than it knows what to do with, but it is remarkable nonetheless. 

Even though it seems as though people front-loaded lots of spending on goods, demand hasn’t been sated. 

Maybe that will change in the year ahead, with the shift toward services getting more pronounced. 

But that it hasn’t happened already suggests that some of the changes in Americans’ spending behavior are lasting.

Retailers might have a harder year ahead of them. 

But they might still sell more than they ever imagined possible before the pandemic.