1. Commerce
December 27, 2017

Traditional US retailers gain over the holiday season, but will it last?

US retailers have seen the biggest sales increase in six years over the festive period, according to MasterCard SpendingPulse, a unit of the credit card company that tracks internet and physical sales.

Between November 1 and December 24, retail sales, excluding automotive, increased 4.9 percent compared to the same period last year.

Holiday sales fell to a low of 2.4 percent in 2014, but have been gradually rising ever since.

Online shopping sales also increased this year by 18.1 percent. E-commerce giant Amazon accounted for the majority of the retailing index’s rise.

Sarah Quinlan, senior vice president of market insight at Mastercard said:

Overall, this year was a big win for retail. The strong U.S. economy was a contributing factor, but we also have to recognise that retailers who tried new strategies to engage holiday shoppers were the beneficiaries of this sales increase.

Michael Arone, chief investment strategist at State Street Global Advisors agrees:

It’s been a solid holiday shopping season. Consumer confidence is high, unemployment is low and although wage growth is slow, it is growing.

What did Americans spend their money on?

Electronics and appliances saw sales rise 7.5 percent — the category’s strongest performance in the last ten years.

Sales of home furniture and furnishings also saw a significant increase of 5.1 percent.

Shares go up

Fierce competition from the online market has not held physical retailers back over the Christmas period and investors have taken note.

A number of traditional brick-and-mortar retailers and department store chains topped the table of the biggest stock market climbers on Tuesday.

Two big US department store chains, Kohl’s and Macy’s were up 6 percent and 4.6 percent respectively.

Footlocker, Signet Jewelers, and Nordstrom were also among Tuesday’s biggest winners.

It won’t last

Despite stock market gains, Diane Swonk of DS Economics warned that the future of physical retailers is ultimately bleak.

This is probably a short-term phenomenon. The longer-term prospects are more negative. The Amazon effect continues to put pressure on prices. That retailers have rallied so much in this shopping season means it’s probably not the time to add to positions.

Traditional US retailers have had a difficult year as online shopping continues to be the most convenient option when it comes to making purchases of all kinds.

Claire’s, Gymboree, True Religion and Toys R US — have all ended up  bankrupt while others have been forced to close thousands of stores across the country.

The Federal Reserve Bank of Atlanta’s estimate for fourth-quarter GDP growth is 2.8 percent, with real consumer spending growth estimated at 2.9 percent.

Verdict deals analysis methodology

This analysis considers only announced and completed artificial intelligence deals from the GlobalData financial deals database and excludes all terminated and rumoured deals. Country and industry are defined according to the headquarters and dominant industry of the target firm. The term ‘acquisition’ refers to both completed deals and those in the bidding stage.

GlobalData tracks real-time data concerning all merger and acquisition, private equity/venture capital and asset transaction activity around the world from thousands of company websites and other reliable sources.

More in-depth reports and analysis on all reported deals are available for subscribers to GlobalData’s deals database.

Topics in this article: ,