As previewed, advanced monthly retail sales for November from the U.S. Census Bureau were stronger (+0.3% month-over-month on a seasonally adjusted annual rate, or SAAR), especially as October was revised lower (which amplifies the month-over-month increase). Year-over-year, the increase was +4.1%, a +70-basis point acceleration from the recent trend. Excluding autos, auto parts, and gas, the increase in retail sales was +5.2% year-over-year, a 100-basis point acceleration from recent trends. Electronics retailers experienced a significant acceleration to +12% (which is consistent with our recent analysis on Best Buy's successful Black Friday visitation trends) as did non-store retail (i.e., e-commerce) to +10.6% growth year-over-year, a +200-basis point acceleration. Food services & drinking places also experienced an outstanding +11.3% year-over-year increase. In terms of laggards, Department Stores showed no improvement (-5.2% year-over-year), which reflects good growth for off-price retailers and very soft results for traditional department stores. Furniture & Home Stores remain challenged (-7.3% year-over-year). In terms of revisions, discretionary retail levels for October were lowered by -50-80 basis points. Home Improvement saw improvement.
E-Commerce: Stronger Finish For 2023
A few weeks ago in our review of the Thanksgiving weekend, we wrote about the strong e-commerce results and its impact on retail visitation. Given that, we've reviewed Q3 2023 e-commerce retail sales data from the U.S. Census Bureau (the most accurate measure in our opinion). For Q3 2023, e-commerce slightly accelerated to +7.8% year-over-year, putting it +104% above 2019’s level. Non-store retailers (i.e., Amazon and other online retailers) experienced the highest growth (+12.4%); by contrast, furniture & furnishings e-commerce declined -16% year-over-year. Clothing was flat year-over-year. For Q4 2023, we forecast that e-commerce will increase +9.3% using the Census Bureau measurement (below). Including Temu sales, the increase will be appreciably higher, likely somewhere in the mid-teens. (As a reminder, Census Bureau doesn’t record Temu sales.) If the e-commerce sector experienced a midteens increase in expenditures (representing $50B+ in growth), that will likely put pressure on retailer traffic. That said, given shipping times, the peak of the wallet share loss for the season is probably behind us for the remainder of the holiday.
Visitation data for Amazon fulfillment centers suggests that they had a very strong November, especially before Thanksgiving. We see that in regular employee visit activity picking up on a year-over-year basis to over +20% versus around +12.5% in October (below). “Night Shifts” are the “shock absorber” for the business, and these also picked up in November. Recall that Amazon began to promote holiday deals the several days prior to Thanksgiving. The ramp in shifts worked indicates that the event led to a material increase in orders boxed. Per Census, non-store retail was up around +10.6% for October and +10.8% for November. As such, it looks like Amazon took share.
