U.S. brick-and-mortar retailers are expected to have a great holiday season as shoppers return to stores with open wallets.
Already, American consumers have been on a spending spree in September despite rising inflation, as evidenced by recent reports released by the Census Bureau, including the September report released in the middle of October.
September’s retail sales climbed 0.7%, following a 0.9% gain in August, beating the 0.2% decline forecast. Excluding autos, retail sales fared even better, rising by 0.8%.
There is a good chance that the consumer spree will gain momentum, thanks to several tailwinds for the entire sector, especially for the traditional brick-and-mortar retailing, which was depressed during the pandemic.
Foot Traffic Returns
Shopping at the nation’s malls and stores is part of the American culture, something shoppers missed during the pandemic. However, as the pandemic impact on daily life eases, they are returning to taste the thrill of experience shopping again. As a result, foot traffic has returned to pre-pandemic levels.
Brightening Jobs Picture
While shoppers return to brick-and-mortar stores, they are in a better position to spend money thanks to an improving job picture, as evidenced by several labor market surveys released last week.
For instance, last Friday’s monthly payroll report showed that the U.S. economy added 531,000 new jobs in October, up from a revised 312,000 jobs in September. That’s great news for retailers, as more jobs put additional money in the hands of consumers, and some of it ends in the registers of the stores that sell goods to them.
The Return of Tourism Shopping
Tourism shopping during holiday seasons has been another tradition helping American retailers that were interrupted by the pandemic. With flights resuming, tourists are expected to return to the nation’s major cities, giving another boost to brick-and-mortar retailers.
Pandemic Savings Could Boost Spending
Meanwhile, there’s the accumulation of savings during the pandemic, which could give an additional boost to both online and offline retailing. U.S. savings account for 10% of GDP, while U.K. and E.U. savings make up 7% and 6% of GDP, respectively. Some of these funds will end up in the registers of U.S. retailers as European travel to the U.S. resumes.
The Bottom Line
Brick-and-mortar retailers are facing plenty of tailwinds, which could help them enjoy a great shopping season.
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