Holiday Sales Did This - InvestingChannel

Holiday Sales Did This

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Covid Pushes Us Towards Automation

Despite Omicron’s higher transmissibility, people aren’t terribly interested in staying home any longer.

After two years, we’re simply worn down.

Even reports of overflowing hospitals didn’t prompt executives at the state or national level into much action.

Heck, Spiderman brought in a massive haul in its opening weekend.

Yet, airlines canceled record holiday flights over the weekend as staffing shortages plagued the industry.

And therein lies the real impact – labor.

We can ignore the virus as much as we please. Yet, like any other disease, it has the capacity to knock you out for a few days.

That means employers have to rethink their operations specifically around employee availability.

In the short-term, that means carrying more inventory where we can.

In the medium to long term, it requires a significant investment in automation and technology to replace human workers.

Famed economist John Maynard Keynes predicted work weeks would shorten to 15 hours as productivity improved.

Back in 1967, the Wall Street Journal predicted that robots would enable us to spend more time relaxing.

Funny how most of us work more than 40 hours a week.

But don’t poo poo these ideas quite yet.

We do continue to drive low-skilled jobs out of the market through automation.

However, it’s shifted our focus to high-skilled work including entrepreneurship.

This isn’t a new trend. But it’s been accelerated because of the pandemic.

The ‘skills gap’ is one of the biggest impediments we face to transition from one economy to the next. It explains why unemployment data looks so good yet nothing feels good.

This is the single greatest challenge facing labor over the next decade. One that many workers half-way through their careers need to understand and address.

Consumer Spending

Holiday Sales Did This

Key Takeaways

  • Holiday sales rose +8.5% from a year earlier and +10.7% vs 2019.
  • Consumers returned to physical stores where year-over-year comps showed a steady increase in sales even as online orders remained strong.
  • Apparel and department stores did extremely well as consumers trended towards smaller, more expensive items.

Garbage bins are full of wrapping paper as Americans didn’t let supply or Covid stop this year’s spending.

Holiday Sales Soar

Mastercard SpendingPulse reported holiday sales rose +8.5% from a year earlier vs expectations of +7.4% from Nov. 1 through Dec. 24.

Here are the key highlights:

  • Online sales grew +11% YOY
  • Consumers returned to physical stores +8.1% YOY.
  • Thanksgiving weekend sales, including Black Friday, pushed retail sales up +14.1% YOY with in-store sales up +16.5% and ecommerce up +4.8% YOY

Source: Mastercard SpendingPulse

Apparel Was the Big Winner

Year over year, apparel sales soared +47.3% after companies struggled with profitability and declining sales for years.

Similarly, department stores did remarkably well, even though they ended up with sales +11% vs 2019.

Source: Mastercard SpendingPulse

Supply Chain Issues Existed But…

While many big-box retailers like Wal-Mart (WMT) and Target (TGT) said they would keep shelves stocked, shoppers ordered early this year to ensure delivery by Christmas.

Consumers also trended towards smaller items and away from those with long delivery times like furniture.

The Bottom Line: Holiday spending was stronger than most market watchers expected.

That’s good news for companies like Macy’s (M) and Mastercard (MA).

Consumers appear to be trending towards smaller, more expensive items rather than larger purchases like furniture, which comes with long delivery times.