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Despite Rising Prices, US Retail Sales are Going Through the Roof
Prices have continued to skyrocket for food, petrol and consumer products in the United States, but shoppers are buying more than ever.
Prices have increased everywhere, from petrol prices to furniture, groceries and even hotel stays. In fact, this price surge is the highest the US has seen since 1991, the Financial Times reported. There are several reasons for this increase, the largest indicator is the pandemic. Secondly, an ongoing chip shortage, strain on the supply chain and low stock levels are also contributing to the price increases.
The Bureau of Labor Statistics has indicated that the consumer price index has increased by 6.2 percent n October, compared to the same period as last year. Specifically, furniture prices have increased by 11.2 percent, consumer electronics like TVs have risen by 12.7 percent, and appliances have increased by 7.2 percent.
Despite this, retailers are reporting growth in sales, both online and in-store.
Retailers like Walmart and Target are reporting increases in online sales. Walmart has reported an eight percent jump in e-commerce sales in the last three months, from July to October. In comparison, this is a mighty 87 percent lift compared to the same period two years ago. All up, online now accounts for 11.5 percent of total US sales – approximately $11.1 billion of its $140.5 billion for the third quarter (not including its loyalty service, Sam’s Club).
In a similar vein, Target’s online sales have continued to increase even as prices lift across the board. But as these costs increase, Target is ensuring that customers won’t feel the brunt. The retailer’s CEO Brian Cornell said they would be absorbing some of the price increases to soften the blow for its customer base.
“We are protecting price,” he said in an investor’s call. “It’s as important to our guests this year as safety has been throughout the pandemic.” Given there’s also a strain on the supply chain, there is an extra weight added to the shoulders of retailers in the lead up to Christmas.
During Halloween, Target’s sales exceeded predictions by 13 percent, thanks to back-to-school purchases, Halloween costumes and a jump start on holiday shopping. Revenue increased by 13 percent compared to the same period in 2020, to $25.65 billion. For comparison, the predicted revenge figure was slightly below, at $24.78 billion.
Sales for Target in October and November have increased 8.2 percent compared to 2020. At this rate, the retailer could be on its way to smash predictions of growth by the US’ National Retail Federation, which is anywhere from 8.5 percent to 10.5 percent. “The holiday season is off to a great start, but we’ve got many weeks in front of us and think we’re going to continue to see that strength throughout the holiday season right up to Christmas Eve,” said Cornell.
While the majority of its sales in the third quarter were made in-store Target will now close its physical locations for Thanksgiving Day – a measure originally intended as a pandemic precaution. “What started as a temporary measure driven by the pandemic is now our new standard — one that recognizes our ability to deliver on our guests’ holiday wishes both within and well beyond store hours,” said Cornell.
But it’s not just the big guns that are experiencing this growth. A report from Digital Commerce 360 found that one in six dollars spent in the US in the third quarter were made online. There has been a 6.8 percent increase in online sales, albeit tapering slightly as physical retail comes in swinging.
While this growth is nothing compared to the massive surge in online sales in 2020, e-commerce is still going strong. Online sales in the third quarter of 2021 are 15.2 percent higher than the same period in 2019 – this shows that e-commerce penetration is steadily increasing year over year, even if it’s not as strong as 2020 levels.
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