December Retail Sales Signal Strong Economic Growth to End the Year

As the holiday season comes to a close, retailers are breathing a sigh of relief, with December retail sales signaling a strong finish to the year. According to the National Retail Federation (NRF), total retail sales for December 2024 increased by 3.2% year-over-year (YoY), surpassing the growth of 1.9% recorded in December 2023. This growth was driven by a notable recovery in non-food sales, which witnessed a 4.4% YoY rise, contrasting with a 2.1% dip in December 2023. In-store non-food sales also rebounded modestly by 0.4%, which was an improvement from the previous year's decrease of 2.9%.

Food sales, although experiencing a slower increase of 1.7% compared to the previous year's 6.3%, still contributed to the overall retail sales growth. This growth was below the three and 12-month average growths but still positive. Specific product categories, such as beauty products, jewellery, and electricals, also made a strong showing under the tree this year, contributing to the overall retail sales performance.



The strong retail sales performance in December 2024 can be attributed to several factors. Firstly, consumer sentiment and spending habits played a significant role in driving sales. According to the Celigo survey, 77% of consumers planned to prioritize value by seeking cost-effective holiday purchase options in 2023. This trend is likely to continue into 2025, with consumers remaining cautious in their spending habits and prioritizing value. The Boston Consulting Group survey also highlights the importance of consumer sentiment in shaping retail sales, with clear percentage discounts on all products being the most preferred deal, cited by 60% of US consumers in November 2023.

The growing popularity of buy now, pay later (BNPL) services also indicates a shift in consumer spending habits. During the 2023 holiday season, Cyber Monday was BNPL's biggest day ever, with holiday shoppers using BNPL to purchase $940 million worth of online orders. In total, consumers spent $16.6 billion via BNPL in November and December 2023, indicating a willingness to spend despite economic uncertainties.



The strong retail sales performance in December 2024 signals a robust economic growth to end the year. As consumers remain cautious but continue to spend, retailers must adapt to these changing preferences by offering competitive pricing, flexible payment options, and a seamless omnichannel shopping experience. By doing so, retailers can capitalize on the strong consumer demand and drive growth in 2025 and beyond.

In conclusion, the December 2024 retail sales performance indicates a strong finish to the year, with consumers continuing to spend despite economic uncertainties. Retailers must adapt to changing consumer preferences and offer competitive pricing, flexible payment options, and a seamless shopping experience to capitalize on this strong demand and drive growth in the coming years.