Retailers are wary of pressure on shoppers in the run-up to the festive season

Days before the start of the holiday shopping season, several major retailers expressed caution towards consumers during the busiest sales period of the year.

Walmart, the largest retailer in the United States, said on Thursday that sales in the latest quarter, which ran through the end of October, rose about 5 percent from the previous year. Shoppers spent more on staples like groceries and less on everyday items like video games.

The shift to essentials has become an increasingly common pattern as consumers squeezed by inflation and rising interest rates shake up their household budgets.

But John David Rainey, Walmart’s chief financial officer, said in an interview that consumers began pulling back in late October, even in food and other staples. “It makes us more cautious on the consumer side as we look into the fourth quarter,” he said.

Activity picked up again this month, he said, as shoppers flocked to special deals. “They’re leaning heavily on these promotional periods to buy these discretionary items that they may have put off this year,” Mr. Rainey said, citing toys and clothing. That bodes well for Black Friday, he said, but less promising are “the shoulder periods before and after those events where we see the consumer not being as strong.”

On Wednesday, Doel reported a sales decline of about 5 percent last quarter, which it said was the result of a decline in discretionary purchases such as electronics, offset somewhat by growth in beauty products and other more commonly purchased items.

“Overall, consumers are still spending, but pressures such as higher interest rates, the resumption of student loan payments, increased credit card debt and reduced savings rates have reduced their discretionary income, forcing them to make compromises,” Target CEO Brian C. Cornell said on a call with analysts. Two-thirds of the toys in stores will cost less than $25, the company said.

Target expects sales to continue to decline in the final months of the year, within a “broad range” that reflects uncertainty about holiday spending.

The U.S. Commerce Department reported that retail sales fell 0.1 percent nationwide in October from the previous month, the first decline since March. The decline, which is not adjusted for inflation, was driven by weakness in expensive categories such as furniture and cars, which may come under pressure from the higher interest rates consumers face when buying on credit.

Home Depot said this week that “softer involvement” on expensive purchases such as countertops and cabinets hurt sales in the most recent quarter. The retailer thrived during the pandemic as people moved and took on home improvement projects, but has recently experienced a “period of moderation,” according to Ted Decker, the company’s CEO.

Macy’s also reported a decline in sales in the most recent quarter, partly due to higher delinquency rates on its credit cards. The country is entering the holidays with much smaller inventories than in recent years.

Consumer demand has proven unexpectedly resilient, despite the Federal Reserve’s attempts to rein in inflation by making it more expensive to borrow. The economy grew at an annual rate of 4.9 percent in the third quarter, far faster than the roughly 2 percent pace that Fed officials consider stable growth. Yet recent studies measure consumer confidence and views on the state of the economy are bleak, even as the labor market remains healthy and wage growth outpaces inflation.

Holiday turnover is expected to grow, but less than in previous years. The National Retail Federation estimates that retail sales will rise 3 to 4 percent in November and December, compared to a 5.3 percent increase during last year’s holiday shopping season.

Some retailers see tougher times as an opportunity. TJX, the parent company of discount retailers like TJ Maxx and Marshalls, reported 6 percent sales growth in its most recent quarter. At HomeGoods, the furniture division, sales rose 9 percent, in contrast to other retailers that reported declines in that category.

Ernie Herrman, CEO of TJX, said consumers come to the retailer’s stores for better value compared to higher-end retailers. “Customers tell us that their value perception of us is very strong, which is key,” he said.