Year-in-Review: 2013 Sales and Consumer Confidence

The holiday shopping season is now behind us, and retailers are reflecting on the year that was and what we might expect in the coming year. After 2012 provided the industry with considerable stabilization and growth, 2013 delivered only light, stagnant gains. As I recently noted in Retail TouchPoints’ 2014 Outlook Guide, stubbornly slow growth in income and employment led to caution among consumers throughout 2013. The result? Retailers are looking to usher in a fresh start to what is hopefully a more profitable New Year for the industry.

Overall, comparable store sales fluctuated throughout the year. In Q1 and Q2, retailers posted 0.9 percent and 1.9 percent growth, respectfully, according to the Thompson Reuters SSS Index, both of which came in well below analyst expectations. Q3 brought a lackluster back-to-school season that saw slow growth, heavy promotions and consumers focusing heavily on big ticket items in order to take advantage of low interest rates—a consistent trend over the last 12 months. Consumer confidence declined steadily from July through November, and wasn’t helped by October’s government shutdown. However, the shutdown and other uncertainties in Washington didn’t necessarily spell doom, either.

Despite concerns of a slow start to this year’s shortened holiday shopping season, retailers performed reasonably well in November. Mixed but modestly optimistic results over Thanksgiving weekend were buoyed by big gains from e-commerce—a trend that continued throughout the season.  In the end, steep promotions and discounts helped push through the fourth consecutive year of growth for the year’s busiest season, with U.S. companies posting a 2.7 percent rise in sales, slightly below NRF’s early projection of 3.9 percent growth.

Still, despite 2013’s tepid numbers, there are several optimistic signs for 2014. Whereas U.S. consumer confidence dropped off in 2012 after sustained sales growth throughout the year, December 2013 saw a solid gain. Employment outlook numbers continue to impact the behavior of consumers and retailers alike, and unemployment has slowly but consistently improved to seven percent over the last 18 months. Coupled with substantial year-end progress in the labor and housing markets, record stock values have also been increasing household wealth, providing positive momentum for buying as we enter the New Year.

Looking back, 2013 embodied a cautious but stable year for the industry, and positive signals throughout the economy now provide a solid foundation for what is hopefully a more robust 2014. Come February, when we release the results of our 2014 Retail Compass Survey of CFOs, we’ll have an even clearer of which issues are top of mind for retailers in the year ahead.

What trends do you expect to see in the retail space in 2014?

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