Clothing and accessories stores, along with general merchandisers, pulled out small sales gains in September compared to the previous month, with weather and politics blamed for the stymied growth.
Specialty store sales rose 0.5 percent last month, to $22.91 billion, and were up an unadjusted 3.1 percent from a year earlier, according to the U.S. Census Bureau’s Monthly Retail Trade report. Sales for general merchandise stores increased 0.3 percent, to $60.29 billion, in September and rose an unadjusted 3.5 percent year-over-year. Department stores, a category within the general merchandise store sector, saw September sales dip 0.8 percent, to $12.36 billion, and decline 1.5 percent from September 2017.
Overall retail sales increased a seasonally adjusted 0.1 percent in September from the previous month. However, excluding automobiles, gasoline stations and restaurants, month-over-month retail sales rose 0.4 percent and were up 3 percent year-to-year. Online and other non-store sales rose 1.1 percent month-to-month and 8.9 percent over the prior year.
“Retail sales were somewhat softer than expected in September and some of the weakness can be attributed to Hurricane Florence and geopolitical trade concerns,” National Retail Federation chief economist Jack Kleinhenz said. “Recent solid wage gains and other fundamentals continue to propel spending, which has been supported by tax cuts, saving and access to credit. Today’s numbers confirm an underlying strength in the industry and a solid trajectory as we go into the fourth quarter.”
James Bohnaker, associate director at IHS Markit, said, “Despite mostly solid economic tailwinds, several developments in the last couple weeks have caused us to temper our outlook for the holiday shopping season. First, rising gasoline prices, now at over $2.90 a gallon on average in the U.S., will likely rattle some consumers if they continue rising above $3 a gallon heading into the holiday shopping season, which looks increasingly likely. Shoppers have gotten used to having extra money in their bank accounts as a result of the 2018 tax cuts, but that stimulus would be largely diffused by rising gas prices.”
Bohnaker said a second factor is a recent selloff in equity markets that will likely cause consumers to think twice about additional discretionary spending, especially if market turbulence continues.
“This is more likely to disrupt spending on luxury retail items and other big-ticket purchases, since higher-income households are more sensitive to swings in the stock market,” Bohnaker said. “As a result of these adverse developments, we have revised down our outlook for holiday retail sales growth from 5 percent to 4.7 percent. This would still be a solid year for retailers, but a step back from the growth of 5.3 percent last year.”
Giving a more upbeat assessment, Moody’s Vice President Mickey Chadha said, “We expect that the overall improving economic fundamentals, coupled with increased credit availability, lower unemployment and wage growth, will translate into higher consumer spending for the remainder of the year.”
Editor’s Note: This story was reported by FN’s sister magazine, Sourcing Journal. For more, visit Sourcingjournal.com.