The most wonderful time of the year is here, and several retailers held October sales events to jump-start the season. Despite early signs of healthy shopping and a comeback from September’s slump, Santa’s sleigh has yet to fully take off. Total nominal US retail sales for Bain-defined categories grew a mere 3.3% year over year in October, compared to 6.9% last year. Nonstore sales are poised to pull the sleigh, growing 12.0% in October, while in-store sales grew just 0.5%.
According to Bain’s Consumer Health Index, upper-income households, which make up more than 50% of spending, are likely to propel seasonal spending. Their intent to spend has rebounded above last year’s levels, while their intent to save has declined sharply since June, indicating these households are ready to get gifting.
Middle- and lower-income households continue to hold back, potentially due to slowing disposable income growth and savings rates alongside rising unemployment. Unemployment, while relatively low, is creeping toward its highest level in nearly two years. Intent to spend is down among these households, signaling that many still feel strapped despite easing inflation.