Holiday Online Sales Swelled 24% as 'Animal Spirits' Drove Traffic, Says NRF

Holiday season online and other non-store sales spiked 23.9% year on year November-December to $209 billion, for 26.4% of total retail sales, blogged National Retail Federation Chief Economist Jack Kleinhenz Monday. Non-store growth in the 2019 holiday season was 14.7% to $167.8 billion, representing 23% of total retail. Combined U.S. retail sales for the 2020 period were $789.4 billion (see 2101150054). NRF had forecast a 3.6-5.2% bump to between $755.3 billion and $766.7 billion in an "unprecedented shopping landscape."

Consumers shopped more online “whether they made their purchases from pureplay online sellers or traditional retailers’ websites,” said Kleinhenz. He called online holiday sales “a standout” that showed how retailers had innovated during the COVID-19 pandemic. “Even as it became too late for reliable delivery of online orders in late December, many consumers still ordered online but took advantage of in-store and curbside pickup services retailers had perfected over the previous several months.”

“‘Animal spirits,’ rather than rational motivation,” helped drive the highest holiday retail sales on record, said Kleinhenz, with a hat tip to economist John Maynard Keynes. “Household emotions likely played into holiday economic decisions as consumers wanting to offset the anxiety and stress experienced during 2020 spent on gifts to enjoy a better-than-normal holiday,” Kleinhenz said. “This was clearly a year when animal spirits outweighed conventional wisdom.” That behavior can produce fluctuations in the economy, he said.

Kleinhenz cited a “push and pull” between excitement over the holidays and worries over a resurgence in COVID-19 cases. Consumers’ ability to spend was boosted by government stimulus checks received earlier in the year and money saved by not traveling, dining out or attending entertainment events. Though rising home values and stock prices helped prop up holiday spending -- and the availability of COVID-19 vaccines helped ease worries over the virus and state restrictions on activity -- "millions of Americans remained out of work and others were working fewer hours."