Early Holiday Promotions Entice Frugal Shoppers, Bumping Retail Spending up 1.3 Percent

It looks like the holiday shopping season is already off to an excellent start. According to a Wednesday update from the US Census Bureau, retail sales in the United States rose by 1.3% in October. Apparently, American shoppers are not currently fazed enough by furtive inflation to get head start on the winter holidays.

This is good news, of course, but it gets better: the 1.3% growth registered in October is better than the modest 1% economist had initially expected. More importantly, perhaps, this is the biggest monthly gain in the sector since February.

Now, it is important to remember that this surge likely includes frugal holiday shoppers looking to take advantage of early deals. So it is not necessarily that people are spending more than they would normally spend during this time of year; only that they are looking for the best deals.

For example, one driving factor behind this uptick could be the fact that Amazon launched a “Prime Day” in October. This is the first time the online retailer has done such held an event in the tenth month of the year (typically, Prime Day is in June).

But this special Prime Day only led the charge. Following this, Target also launched its “Deal Days” while Kohl offered toy promotions that should last for the rest of November. Apparently, retailers are hoping to build on the success of last year’s traditional doorbusters by aiming at those shoppers looking for big discounts before they even pull out their debit card numbers.

Indeed, the numbers indicate that holiday promotions occupy a big part of the October retail sales boost. As was furniture, big categories like health and personal care saw a bigger demand than that of September. On the other hand, spending at stores that carry clothing and sporting goods held flat, or even declined in some ways. Analysts believe this could be an indication that the sales or promotions in these retail sectors are not enticing enough; at least for now.

Target is an excellent example of the importance that promotion like this can play. Sales at the big box retailer rose in the first notably in the first half of the month, when they launched an initial round of holiday sales. Almost like clockwork, demand started to taper as soon as these promotions ended.