Credit: Photo by Alexander Kovacs on Unsplash
AUTHOR|Ben Unglesbee
Source: www.retaildive.com, February 2020
Dive Brief:
- Retail trade sales in January were up 0.1%, according to figures released Friday by the U.S. Commerce Department. Total domestic retail sales (including autos and fuel) ticked up 0.3% to $529.8 billion in the period.
- Retail trade sales were up 4% year over year, according to the report. Total sales for December were revised down, with estimates now showing 0.2% growth.
- Year over year, department store sales fell 3.9%, electronics sales fell 2.9%, a category made up of sporting goods, hobby and musical instruments fell 1.5%, and clothing store sales declined 0.7%. Meanwhile, sales at non-store retailers were up 7%, general merchandisers’ sales were up 3.3%, and furniture store sales were up 2%.
Dive Insight:
January’s retail sales contained few surprises and showed a still relatively strong economy and growing retail industry.
Moody’s Vice President Mickey Chadha attributed the strength in sales to low unemployment numbers, economic growth and the “resiliency” of consumers. “Despite some pockets of weakness, sales continue to be good, led by e-commerce, grocery stores and motor vehicles and parts” while the “[l]aggards continue to be department stores and electronics stores,” he said in emailed comments.
Again, no surprise there given the holiday sales figures trickling in. For the department store sector, those reports ranged from middling to bleak for the holidays. And the declines have continued into the new year. Meanwhile, Amazon once again posted strong sales growth — fueled by its move toward one-day Prime shipping — as the e-commerce giant and its sector as a whole continue to gain sales and market share.
But, as Retail Metrics mentioned in an emailed note, e-commerce growth (non-retail stores) was down considerably from a year ago, and January marked the first time since December 2018 that e-commerce didn’t lead other retail sectors in growth.
GlobalData Retail Managing Director Neil Saunders called pure retail sales growth “modest” at 2.7%. “However, this slower growth is not caused by economic difficulties as the consumer was still out spending on autos and foodservice and was willing to fork out more money on gasoline,” Saunders said in emailed comments. “Confidence and spending power are there, however, retailers need to work much harder if they want to tap into them.”
In Chadha’s view, many of last year’s trends for retail players and consumers will carry on this year. “We continue to expect that consumer confidence, wage growth, low unemployment and the continued GDP growth in the US will result in 2020 retail sales growth of over 3.5%, led by e-commerce players like Amazon, off-price retailers like TJX and Ross, value and convenience-oriented retailers like Dollar General and Dollar Tree, and discounters and warehouse clubs like Walmart, Target and Costco,” he said.
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