Retail sales are up 0.9% in April compared to last month (seasonally adjusted) despite concerns over inflation, stock market volatility, continuing supply chain challenges and the war in Ukraine. David Wilkinson, President & GM, NCR Retail, stated, “Despite a sense of consumer malaise largely spurred by high gas prices and inflation, a strong labor market and significant savings accrued throughout the pandemic should keep the economy expanding in the long run.” Month over month category performance for most segments was positive including nonstore retailers, food services and department stores, with sales up 2.1%, 2.0% and 1.1% respectively. Discount stores and groceries were essentially flat to last month.
Consumer confidence drops, spending is up
The University of Michigan consumer sentiment for the US fell to 59.1 in May of 2022 compared to 65.2 in April and is the lowest since August 2011 showing that American consumers are concerned about inflation. However, April indicators of what consumers are actually doing tell a different story with spending up 8.7% (excluding autos and gasoline) for the month as compared to April of last year when consumer sentiment was 88.3. Jonathan Silver, CEO of Affinity Solutions, stated, “Let’s not confuse consumer confidence with consumer consumption. Our data shows spending in April up around 5% year-over-year. While consumers are rattled from the perfect storm of rising inflation, a declining stock market and the war in Ukraine, people are still spending, although somewhat more cautiously. In fact, month-to-month spending from March to April increased slightly at 0.1%.”
Retail sales strong year-over-year
Retail sales categories that performed well year-over-year (YoY) in April include non-store commerce and apparel/accessories, up 11.3% and 11.2% respectively. Higher gas prices have driven gasoline sales up 36.2%. Silver said, “While April sales increases are driven by an overall rise in discretionary spending, it also reflects higher-than-normal prices for goods and services. Also, many consumers are downscaling, buying lower quality versions of the same products to save money.”
Retailers remain optimistic about 2022
Andy Jassy, CEO of Amazon
Wilkinson said, “We’ve seen retailers continue to open stores at a significantly higher pace. From discount stores to digital brands, we’ve seen store openings outpace closings almost three to one this year which is a positive sign for the sector as well as the overall health of the economy moving ahead.”