Holiday sales rose stronger-than-expected 8.3% as consumers bought gifts to lighten mood during pandemic

People shop for holiday items at the Country Store on Main Street in Stockbridge, Massachusetts on December 13, 2020.

Joseph Prezioso | AFP | Getty Images

Holiday retail sales rose 8.3% from 2019, according to data released by the National Retail Federation on Friday, as consumers embraced the gift-giving season as a way to cheer themselves up during the Covid pandemic.

“Faced with rising transmission of the virus, state restrictions on retailers and heightened political and economic uncertainty, consumers chose to spend on gifts that lifted the spirits of their families and friends and provided a sense of normalcy given the challenging year,” said Matthew Shay, president and CEO of the National Retail Federation, in a statement.

The major retail trade group predicted in November that 2020 holiday sales would rise between 3.6% and 5.2% year over year, amounting to between $755.3 billion and $766.7 billion. It said Americans would spend more as they had fewer travel and dining out expenses and felt hopeful about the distribution of the Covid vaccine.

Holiday sales on average have increased 3.5% for the past five years, and they rose 4% in 2019, the NRF said. The sales exclude automobile dealers, gasoline stations and restaurants.

The pandemic shook up typical holiday shopping patterns. Many retailers started sales as early as October and kept stores shut on Thanksgiving Day. They put more deals online and expanded contactless options, such as curbside pickup to tamp down on the number of shoppers crammed in stores.

Even so, there were some factors out of retailer’s hands, such as economic uncertainty and unemployment during the recession and fewer gatherings with family and friends.

So far, retailers’ holiday results have seemed to mirror pandemic-related trends. Lululemon, which has seen strong sales in athleisure as people work from home, forecast fourth-quarter earnings at the top end of its expectations because of strong of a strong holiday season. Target said comparable sales online and in stores jumped by 17% in November and December as holiday customers flocked to convenient, contact-free options like curbside pickup. Yet Nordstrom and Urban Outfitters reported disappointing holidays as many shoppers steered clear of malls.

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