Holiday shoppers abandoned their early reluctance and boosted spending as the season wore on, pushing sales to the biggest increase in more than a decade, according to research firm Customer Growth Partners.
On Tuesday, the firm raised its holiday sales estimate to a 4.9 percent gain over last year to $637 billion. That would be the biggest increase since 2005. Customer Growth had previously predicted a 4.1 percent advance.
Online sales grew an estimated 15 percent, up more than a percentage point from the firm’s previous forecast. Sellers of consumer electronics, home-improvement goods, beauty products and toys saw robust sales and minimal markdowns, according to Craig Johnson, Customer Growth’s president. Low unemployment and fuel prices, as well as real disposable income gains, boosted spending.
Then there was clothing.
“You saw rampant discounting,” with 40 percent off required to even get customers in the door and half off to get them to buy, he said.
“If your name is Home Depot, your margins are going to be great,” Johnson said in an interview. For clothing and department-store chains, “you’re going to have trouble.”
Pre-election jitters and unseasonably warm weather produced a slow October that bled into a similarly wan November — until the middle of the month, when spending came back, Johnson said. Even the normal early-December slowdown, when shoppers take a break between Thanksgiving sales and last-minute deal frenzies, was shallower than normal, he said. The firm’s forecast excludes sales from autos, auto parts, fuel and restaurants.
The post-Christmas week is shaping up strong, Johnson said, helped by a variety of factors including most workers getting Dec. 26 off. Retailers in recent years have increasingly seen the week after the holiday, when customers make returns and exchanges, as a chance to lure them with a new selection of full-price merchandise.
“Instead of just being a neutral or a negative, it’s a plus,” he said.
UPS expects to deliver 1.3 million packages back to retailers on Jan. 5, celebrated by the delivery service as National Returns Day.
Surging online sales have been followed by a surge of returns by air, and if UPS is right, it will be its busiest returns day ever, topping last year’s 1 million.
By the end of January’s first week, the Atlanta company said Tuesday that it will likely have returned 5.8 million packages, topping last year’s 5 million, which was also a record.
A survey by the National Retail Federation estimated that more than $260 billion worth of merchandise was returned in 2015.
The Associated Press contributed to this report.