A record gain in holiday sales that most retailers would like to forget
|Summary
The annual gain in holiday sales revealed a record increase last year, but the 2021 holiday shopping season was not without its challenges. A flop in December sales confirmed that consumers did a lot of their holiday shopping early amid concerns over strained supply chains, and higher prices took some joy out of last year's gain.
As we think about 2022, persistent price pressures, a virus that won't go away and a lack of stimulus aiding the household sector all demonstrate considerable risks to the outlook for consumption.
That's a wrap
The massive increase in holiday sales for 2021 was roughly one-and-a-half times the previous record, and yet, the fact that the season ended with a flop in December amid soaring COVID cases and lean inventories underscores how many retailers are still struggling nearly two years into the pandemic.
Holiday sales posted a record annual increase in 2021 with sales in November and December coming in 12.9% ahead of their 2020 level, which was itself a record gain (Figure 1). This neared the top end of our original September forecast of a 10%-13% increase.
Despite the record gain, this outturn masks some important considerations for the consumer. Sales stumbled at year's end, with the level of holiday sales ending 2021 close to where they were roughly six months earlier. In addition, sales were boosted by higher prices suggesting dollar-driven increases rather than an uptick in sales volume. We willdig deeper into these two themes in this report and discuss the implications of this tough finish to an otherwise remarkable year for retailers.
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