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Friday, December 03, 2010 12:29 AM

SpendingPulse: Retail Sales Led by Apparel, Consumer Electronics and Appliances Down

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Retail sales are way up year-over-year and apparel is leading the way. I have this email from SpendingPulse to share:

Michael McNamara, Vice President, Research and Analysis for MasterCard Advisors SpendingPulse, observes, “Industry sales generally did well in November, building on the positive momentum first observed in September that carried through the early fall. The November retail sales gains indicate a solid start to the 2010 Holiday season for most categories, with some recording significant year-over-year gains.”

McNamara continued, “Regarding Black Friday, it is important to keep in mind that this 24-hour period generally represents 5-6% of total retail sales, ex-auto, for the month of November, although there is significant variation by category. Sales tactics that have been developed over the past several years have been increasingly effective at driving sales to make it an almost $19 billion day, ex-auto. But it is becoming harder to post significant year-over-year growth rates for total sales on that specific day. This year, a number of factors such as earlier online and brick-and-mortar promotions may have further diluted the importance of the day itself, distributing sales over a longer period of time.”

Year-over-year Total Apparel sales in November saw another sharp monthly increase. At 9.6% this was the largest year-over-year growth in 2010 for that sector following the previous record in October. Total apparel has enjoyed 8 out of 11 months of year-over-year gains so far in 2010. In November, all of the sub-sectors posted year-over-year growth.

For the second consecutive month, the Consumer Electronics and Appliances segment posted a year-over-year decline, although at -1.1%, it was not as severe as October’s decline. The Consumer Electronics sub-category was down by 1% while the Appliance sub-sector fell by 1.6% year-over-year.

eCommerce was back in double-digit year-over-year growth in November as consumers took advantage of free shipping offers and online-only specials. The category posted a year-over-year increase of 12.0%, the first double-digit growth rate since July, and the largest increase since May. The Apparel sub-category did very well at 22.2%, increasing by double digits for the 12th consecutive month, led mainly by Children’s Apparel at +33.3%, and Footwear at 32.7%. This was the first time since March that growth was over 20% and it was the largest growth rate for the year. Online sales of electronics were up 6.0%, back to the solid growth in September, with growth particularly strong during the Thanksgiving week.

The SpendingPulse Luxury ex-Jewelry Index, which encompasses sales at high-end restaurants, food stores, department stores and general apparel categories, posted positive results in November, although not as robust as October, growing 1.6% year-over-year. While mixed results in the financial markets put pressure on the sector, relatively easy comparisons with last year’s performance helped keep the growth rate positive.
Please Note: SpendingPulse estimates total U.S. retail sales across all payment forms, cards, cash and check. It is not a measure of MasterCard transactions or MasterCard financial performance.

Pent Up Demand For Clothes

The SpendingPulse report shows a pent-up demand, not for junk, electronics, or appliances, but for specifically clothes.

The deflation squeeze is even pressuring grocery stores as noted by the MarketWatch report Kroger takes supermarket shares down
Kroger Co. and shares of U.S. supermarket chains slid early Thursday after Kroger's third-quarter earnings report didn't show much improvement on the pricing front. Kroger shares tumbled 9% to $21.57. Safeway fell 5% to $22.25. Supervalu lost 1% to $8.78. Kroger and Safeway were the worst performers on the S&P 500 Index.

In a conference call, Kroger Chief Executive David Dillon said shoppers continue to be cautious on spending. "Overall, the economic recovery is a slower and weaker than we anticipated it would be at this point in the year," Dillon said. He said deflation persists, except for meat, dairy and produce items in the company's stores.
It's nice to see shoppers focus on real needs instead of electronic garbage. However, pent-up demand for apparel cannot last forever, nor can apparel sales form the foundation for a lasting recovery.

Mike "Mish" Shedlock
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