Retail sales remained flat from August to September, while some categories showed slight increases, such as department stores up 1.3% and discount stores up 0.6%. Nonstore and apparel/accessories were both up 0.5%. Gas sales were down 1.4% compared to August, while grocery was up 0.4%. Demand remains steady month-over-month despite higher prices and higher interest rates.
Inflation continues through September
The Consumer Price Index showed the rolling 12-month price variance was up 8.2%, with September prices up 0.4% across all categories compared to August. Consumer demand is outpacing the overall price increases, but higher prices may impact holiday purchasing. Consumers are spending more this year than last year on food, where prices are up 11% and gasoline, with prices up 18%. Home heating is projected to be 17% higher than last year. These factors will impact discretionary spending as the holiday season begins.
Retail sales September
Year-over-year sales for the fiscal retail year were up 9.8% through September, driven partly by higher prices than last year. September sales were boosted even more, up 10.8% versus last year. Key fashion retail categories with higher sales compared to the previous year include e-commerce/nonstore, up 13.1% and apparel/accessories, up 2.7%. Declining retail segments include department stores and electronics (including appliances); They took a substantial hit in September, with sales down 6.2% and 5.8%, respectively, compared to last year. Furniture and home furnishing sales were down 3.1%.
Heading into the holiday season
Apparel/accessories, department, and discount, along with electronic stores, bank heavily on the holiday months of November and December, with sales that accounted for more than 30% of total annual sales last year. Sensormatic Solutions’ recent U.S. Holiday Consumer Sentiment Survey showed that more shoppers plan to shop in physical stores this holiday as compared to last year. The survey also showed that 52% of consumers surveyed have already started or plan to start shopping for holiday gifts before November and that financial considerations and product availability will affect their decisions. “These results echo what we saw in our predictions for the top busiest shopping days,” said Brian Field, global leader of retail consulting and analytics for Sensormatic Solutions. “We predict consumers will be more proactive during this year’s shopping season.” Over half (57%) of survey respondents said finances would play a role when they begin their holiday purchasing, and 42% said the timing of promotions would also affect their spending cadence.
“Though shoppers feel very comfortable making their holiday purchases in-store this year, there’s still a demand for overall convenience that make BOPIS and curbside pickup attractive options,” said Kim Melvin, global leader of marketing, Sensormatic Solutions. “A combination of traditional brick-and-mortar visits and alternative shopping methods are helping consumers complete their holiday wish lists as factors like price, product availability, and convenience are at the top of everyone’s minds.” The survey showed that 35% of consumers would use buy online-pick up in-store options, and 30% intend to use curbside pickup.
External factors may impact spending this holiday season
As retailers anticipate the holiday shopping period (the most profitable period for many retailers), consumer spending will be unpredictable based on a handful of economic and environmental factors. Inflationary pricing, higher interest rates impacting credit card revolving balances, projected higher home heating expenses as the weather cools down, and gasoline prices that are climbing again will impact consumer spending. In addition, the fear of a looming recession and ongoing geopolitical issues can impact consumer sentiment.