The news: Retail sales rose 0.4% MoM and 3.9% YoY in December, per the US Commerce Department—marking a solid end to a solid year for retail spending.

• Control group sales—which exclude food services, auto dealers, building material stores, and gas stations, and are used in GDP calculations—increased 0.7% MoM, the strongest growth in three months. That beat analysts’ expectations for a 0.4% rise.
• On an annualized basis, control group sales rose by a healthy 5.4% the last three months of the year.

Behind the numbers: Eleven of the 13 categories tracked by the Commerce Department had a YoY uptick in sales, led by motor vehicle and parts retailers, as well as furniture and home furnishings stores. Nonstore retailers also had a strong December, aided by a banner Cyber Monday and deep holiday discounting.

While some retailers—most notably department stores—had a lackluster holiday season, others reported a solid end to the year, fueled by discounts as well as renewed interest in big-ticket purchases.

• Target joined Abercrombie & Fitch, lululemon athletica, and Nordstrom in raising its Q4 outlook, which it credited to a “meaningful acceleration in discretionary categories” as well as 9% YoY ecommerce growth during November and December. The retailer now expects Q4 comparable sales to rise 1.5% YoY, up from its previous forecast of roughly flat. However, it stuck by its profit guidance, an indication that it relied more heavily on discounts to motivate shoppers.
• Richemont’s Americas revenues jumped by 22% YoY in the holiday quarter, fueled by strong US demand, the Cartier owner said. Likewise, ultra-luxe brand Brunello Cucinelli reported a 17.8% YoY increase in Americas sales, as higher-income consumers continue to spend.

What lies ahead: Retailers face a more complex and uncertain landscape in 2025—mainly due to the lack of clarity surrounding President-elect Donald Trump’s tariff plans. The likelihood that those policies will cause prices to rise and reignite inflation is pushing many consumers to pull forward big-ticket purchases and, in some cases, stockpile items like cosmetics, home goods, and nonperishable groceries.

It’s also affecting their outlook on future spending.

• Over half—52%—of consumers say that rising costs due to tariffs or a trade war would significantly alter their purchasing behavior, per a First Insight survey.
• Roughly one-third (31%) would prioritize essential items only, 25% would buy fewer items, and 16% would trade down to private labels.

In contrast, high-income consumers are largely optimistic—mainly due to their greater confidence in the incoming Trump administration’s proposed economic and tax policies.

• Some 42% of consumers with incomes over $100,000 say they are spending fairly or very freely, according to an Attest survey.
• At the same time, the proportion who report spending cautiously (37%) has fallen 7 percentage points YoY.

That’s good news for retailers like Richemont, lululemon, and Nordstrom that target more affluent customers—but it also emphasizes the widening chasm between high-end players and everyone else.

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