Consumers continue to spend, but that doesn't mean that all retailers are benefiting.
Retail sales rose 0.4% on a sequential basis in November, the U.S. Census Bureau reported on Thursday. That was a larger-than-expected increase and up from flat sequential growth in October.
While that may be good news for the economy in general and for retailers as a whole, don't expect owners of department stores, apparel outlets or sporting goods shops to jump up and shout. Each one of those groups of retailers posted sequential declines last month, according to the Census Bureau. The new figures reflect the mixed same-store sales numbers that retailers released last week.
In contrast to department and apparel stores, other retailers did well last month. Sales at furniture and home furnishings stores, building materials and garden supply stores, and mail-order and online retailers each rose by more than 1% sequentially in November.
Though sales may pick up in December with the holiday shopping season in full swing, some are projecting that retail sales for department, apparel and electronics stores -- the biggest traditional beneficiaries of holiday spending -- will continue to be weak.
"Our projection is that holiday sales will be soft, softer than retailers are projecting," said Kevin Regan, senior managing director of FTI Consulting. "We're not inclined to think we are off our mark."
Regan and others blame the soft sales for such retailers on the shortened holiday shopping season, rising unemployment and risk-averse companies.
Black Friday, the day after Thanksgiving, which marks the traditional start of the holiday shopping season, came one week later than normal this year. That meant that November this year had just two days of holiday shopping, compared with eight days last year. In explaining their disappointing same-store sales numbers for November, many retailers cited the shortened holiday shopping time for the month.
While that may have something to do with it, more important has been the lack of a must-have product this holiday season, analysts say. Unlike past years, when Furbies, Beanie Babies or PlayStation consoles were all the rage, this year doesn't seem to have a standout.
"There's nothing out there that everyone is saying I've got to have," said Russell Jones, vice president for retail consulting at Cap Gemini Ernst & Young. "People are looking for inspiration elsewhere."
"The big thing that the numbers tell us is that consumers don't have any hesitation about shopping," Jones said. "Significant segments of department stores and the mass market are not connecting well with consumers. What consumers are saying is that they are willing to spend their Christmas money in nontraditional places."
The poor showing for department and apparel stores may be, conversely, a reflection that consumers are being more cautious with their money, Regan said. With unemployment jumping to 6% from 5.7% in October, consumer spending is going to be soft for some time to come, Regan said.
"There's more people being laid off, and they're the ones who are shopping," he said. "As long as there's this shroud hanging over the economy, they're going to spend less, not more."
But not everyone's so dour about the economic outlook--and that of department store or holiday sales. The employment situation is probably better than people realize, said Mark Vitner, senior economist for Wachovia. The economy has been in recovery since the early part of the year; the data simply haven't reflected it yet, said Vitner, who added that the unemployment numbers may be revised down.
"The economy has a little more momentum than expected," Vitner said. "We're probably going to see better numbers going forward for motor vehicle sales and holiday sales."