Monthly Retail Sales From the US Commerce Department

In the segments covered by Retail Dive, retail sales in May rose 4.5% year over year, with e-commerce surging 6.4%, according to numbers released Tuesday by the U.S. Department of Commerce.

The report underscored enduring consumer resilience despite challenges like continued inflation, rising debt and economic uncertainty, analysts said. In May restaurants took the brunt of consumer wariness to spend, while core retail held up, according to GlobalData Managing Director Neil Saunders.

That could be because inflation is showing up in services more than goods prices, according to a report from the National Retail Federation. The group, which now uses credit card data rather than the government’s numbers to calculate monthly sales, found that core retail sales in May (excluding restaurants, automobiles and gasoline)rose 2.88% year over year.

That could continue through the summer, as many consumers say they’re cutting spending on experiences, including home entertainment, dining out, travel and vacations, according to the KPMG Consumer Pulse Survey, also released Tuesday.

Some retail sectors faltered last month. Home goods sales continued a string of declines, falling nearly 6%, as sporting goods and hobby stores fell nearly 2%.

Electronics stores continued their recovery, however, with sales up 3%. Apparel sales rose 4.5%, contributing to 0.7% growth at department stores. The uptick at department stores is further evidence of consumer confidence, but also partly thanks to improved customer experience at many of those retailers, according to Saunders.

While consumers again came through for retailers in May, their reluctance to spend could rise throughout the year, he also said.

“The subtle changes in buying behaviors – more caution, more shopping around, more concern for value, more bargain seeking – should not be overlooked,” he said. “This is not a terrible retail economy, but it is one in which the consumer remains skittish.”

In retail segments followed by Retail Dive, retail sales in April rose 5.2% year over year, with e-commerce surging 12.8%, according to figures released Wednesday by the U.S. Department of Commerce.

Inflation accounted for some of the increase: GlobalData research found that, excluding restaurants and fuel, volumes rose just 0.8%. But, otherwise, inflation remained muted in April, with grocery prices edging down 0.2% from March, according to the federal government’s consumer price index, also released Wednesday. Wage growth is also outpacing inflation and the job market continues to expand, further boosting spending power, according to Robert Frick, corporate economist with Navy Federal Credit Union.

On average, tax refunds are higher this year, which also helped boost spending in April, especially at electronics stores, which rose 2.9%, according to GlobalData. However, consumers remain cautious and are still avoiding bigger-ticket purchases, analysts said.

“Even as price growth is slowing, it can simply just feel like everything costs more, because it does,” Wells Fargo economists Tim Quinlan and Shannon Seery Grein said in a research note Wednesday. “This is challenging for consumers where prices of key items like groceries and gasoline have outpaced broader inflation and average wages. This is one of the reasons we believe we’re seeing persistently low confidence/sentiment readings and the emergence of a more choosy consumer who is spending less on discretionary items today in order to prioritize non-discretionary purchases.”

That impacted various sectors differently: Home goods and furniture sales fell 7%; sporting and hobby sales fell 5.9% and apparel fell 0.9%, per the government’s report. The quality of promotions and ranges at clothing retailers failed to lure shoppers last month, according to GlobalData’s channel checks.

“The clothing market remains very skittish and the need to entice consumers into spending is still paramount,” Saunders said.

Department stores took the brunt of that, with sales down 5.3%.

“The earlier timing of Easter is admittedly unfavorable, but the sector is not helped by incredibly lackluster ranges, poor selling environments, and a general lack of focus,” Saunders said. “The poor performance underlines the fact that in a softer market, mediocre retail standards and disciplines give consumers the excuse they need to cut back and ultimately produce very poor numbers.”

The National Retail Federation, which leverages credit card data rather than the government’s numbers, found April retail sales (minus restaurants, autos and fuel) essentially flat year over year. “We see some moderation in spending as consumers continually search for value,” NRF CEO Matthew Shay said in a statement.

Indeed, even as prices have stabilized and inflation has eased, “consumers are still actively downtrading,” searching out deals and lower-priced alternatives, according to Matt Pavich, senior director of strategy and innovation at Revionics, which specializes in retail price optimization.

“Retailers should remain focused on offering the best promotions and everyday prices to grow share profitably as consumers remain committed to value heading into the Summer months,” Pavich said in emailed comments.

Retail sales in March soared 5.3% year over year in the sectors tracked by Retail Dive, beating inflation and signaling consumer strength, according to some analysts. E-commerce rose an even more robust 5.6%, according to numbers released Monday by the U.S. Commerce Department.

“Retail sales aren’t increasing just because prices are going up,” Bankrate Senior Industry Analyst Ted Rossman said in emailed comments. “Americans are actually buying more stuff. This is one of the strongest retail sales reports we’ve seen in the past couple of years.”

The results should dispel worries that consumer spending has slumped, according to Robert Frick, corporate economist with Navy Federal Credit Union. Pandemic-related support has ended and much of the savings from that is gone, but employment and wage growth are strong, he said in emailed comments.

Not all analysis was so upbeat. The National Retail Federation, which now uses credit card data rather than the government’s numbers, also noted the strong job market and wage gains, but said many consumers remain focused on value. As a result, “retailers are having to keep prices as low as possible,” according to a statement from NRF CEO Matthew Shay. The group found that retail sales in March, excluding restaurants, automobiles and fuel, rose 2.92% year over year.

Consumer reticence showed up in certain sectors. Home goods sales plummeted 8%, sporting goods sales fell 4% and electronics sales fell 1.5%. Apparel retailers had a good month, with sales up 3.1%, but that couldn’t prevent essentially flat sales at department stores.

“The sluggish housing market is still sapping demand, as is weaker confidence in making big-ticket purchases,” GlobalData Managing Director Neil Saunders said in emailed comments.

Temporary lifts like an early Easter and higher-than-usual tax refunds helped retailers in March, GlobalData found. Moody’s Ratings expects consumer spending “to moderate slowly due to lessening optimism about employment prospects and future conditions, still-high costs of living, and elevated borrowing rates,” according to emailed commentary from Moody’s Ratings Vice President of Corporate Finance Mickey Chadha.

Rossman and Chadha also warned about growing credit card debt, which in Q4 topped $1 trillion, and rising delinquencies.

“Overall, March continues to point to a reasonable year for retail,” GlobalData’s Saunders said. “However, signs of a more constrained consumer continue to abound beneath the headline numbers.”

In February, which had an extra day this year, retail sales in the segments covered by Retail Dive rose 6.9% year over year, as e-commerce surged 10.6%, according to numbers released Thursday by the U.S. Department of Commerce.

“Retailers of physical goods are encountering consumers who are being especially thoughtful about how much they spend, especially with higher costs in many areas of their lives and a lingering holiday debt hangover,” Bankrate Senior Industry Analyst Ted Rossman said in emailed comments.

The National Retail Federation, which has switched to using credit card data rather than figures from the federal government, calculated that core retail sales (excluding restaurants, autos and gas) rose 6.69% year over year in February. NRF CEO Matthew Shay attributed the result to “a strong job market and increases in real wages.”

Taking out the extra leap year day, core retail sales (minus restaurants, auto and gas) rose 1.8%, the lowest rate of growth since last April, according to GlobalData research.

“It underlines the fact that consumers continue to be very careful and cautious in their buying habits and are shopping and spending more modestly, especially in certain categories,” GlobalData Managing Director Neil Saunders said in emailed comments.

Indeed, various segments showed weakness and strength in the period. Home goods continued its post-pandemic slide in February, with sales down 6.3%, and sporting goods sales remained relatively flat, falling 0.03%.

But apparel sales were up 4.6%, helping push department store sales up a slim 0.3%. Clothing volumes have been up as consumers continue to refresh their closets, according to Saunders. But shoppers also continue to pull back from department stores, to the benefit of off-price stores, he said.

“The reluctance to pay full price remains strong, which is why many clothing retailers are having to discount to stimulate demand,” he said. “Fortunately, margins currently allow for this as supply chain costs are coming down.”

Despite such signs, it’s too early in the year to know how reluctant consumers will continue to be this year, according to Robert Frick, corporate economist with Navy Federal Credit Union.

“Consumers have the money, as inflation-adjusted incomes have been rising, so the question is, have consumers grown cautious?” he said in emailed comments. “It’s too soon to say, but with inflation stuck for now above 3% and the jobs market growing tighter that’s a possibility. Still, the American consumer has been underestimated in the past and retail spending remains above the pre-pandemic trend, so no need to sound alarm bells yet.”

In the segments covered by Retail Dive, retail sales in January rose 3.8% year over year, based on figures released Thursday by the U.S. Department of Commerce. Various analysts deemed this a decent performance, but one that suggests some slowing in consumer spending this year. E-commerce surged 8.2%.

“Essentially, the mini retail boom at the end of 2023 was built on shaky foundations that are not carrying forward into this new year,” GlobalData Managing Director Neil Saunders said in emailed comments.

Bad weather may have kept some shoppers out of stores, analysts said. But January may also have brought on a financial hangover for U.S. consumers, who were already carrying a record level of credit card debt, for longer periods of time, before the holidays began, according to Bankrate Senior Industry Analyst Ted Rossman. Households added another $143.1 billion to card balances in Q4, with some $55.6 billion added in December alone, according to GlobalData research.

While noting January’s sluggish retail sales, economists at Wells Fargo and the Navy Federal Credit Union said that relatively strong jobs and wages will likely shore up consumer spending to some extent this year, mitigating any slowdown.

However, volumes were down 0.8% in the month, after growing 0.9% in December, according to GlobalData.

“Again, this dip bears all the hallmarks of shoppers who are cutting back and living more within their means,” Saunders said. “The key question is whether this volume slide continues into the months ahead or whether it simply represents consumers taking a breath after a period of elevated consumption.”

Some retailers fared better than others, with sporting goods and hobby stores dropping 1.8%, electronics down 5.5% and home goods stores plunging 7.5%. Apparel sales edged up 1.4%, but that did little for department stores, which fell 5.1%, in part because budget-minded consumers continue shifting to off-price stores, according to Saunders.

“Many of the problems postponed at the back end of last year are now becoming more significant,” he said. “This does not mean that 2024 will be a disaster, but it does signal a tougher and bumpier year than 2023.”