Experiential spending drives retail sales in January
Retail sales increased 7.2% in January according to Mastercard, with year-over-year increases observed across almost all categories
- Ebere Anokute
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January retail sales up 7.2 percent, driven by experiential spending
The numbers for January retail spending are in, and it looks like we’ve all been doing our part to speed up the return to normal. According to MasterCard SpendingPulse, which aggregates in-store and online retail sales across all forms of payment, January retail sales increased by 7.2% year-over-year, while online sales specifically showed a year-over-year increase of 10.4%. Driven by robust pent-up savings and a continual return to experiences, many categories were bolstered by consumers’ demonstrated preference for in-person activities. Restaurant sales in particular grew by 36.7% year-over-year, and are even up 16.6% compared to pre-pandemic levels! Personally, going out for dinner these days has meant enjoying roughly two margaritas per meal, as opposed to my pre-pandemic average of just one. It’s encouraging to see that the rest of country has been following suit.
Apparel retailers were similarly supported by the return to in-person experiences, as more outings required new (and maybe larger?) clothes, resulting in a 37.6% increase in sales. This prosperity even extended to department stores, which saw sales increase by 10.5% over 2021! Raise your hand if you’ve been to a Kohl’s in the last month… don’t lie.
Another category that enjoyed strong growth from both a year-over-year and pre-pandemic perspective were luxury retailers, which saw sales increase by 45.3% from last year, and 21.9% from 2019. Many of these retailers are reinvesting these gains back into their physical stores; like Versace, that recently announced plans to open almost 100 new stores worldwide, including a new storefront at 747 Madison Avenue in NYC.
More store openings than closures in 2022, led by discount retailers
With things looking up across the board, it’s no surprise that we’re hearing good news when it comes to new store openings as well. According to Coresight Research, retail openings are expected to outpace planned retail closures in 2022, led by strong activity from discount retailers. This is a trend that is continuing strong from 2021, where we saw the fewest retail bankruptcies since 2013, contributing to a decrease in store closures from the all-time high seen during the pandemic.
# of major retailer bankruptcies
Discount retailers opened the greatest number of stores in 2021, and the same will be true in 2022. Dollar General, already the largest U.S. retailer by total store count, has announced plans to open over a thousand new stores this year. Burlington, Aerie, and Big Lots are among the other discount retailers planning to open new locations as well, with new store announcements ranging from 50 to 110.
Of course, closures are a part of the retail circle of life: CVS Health tops the list of store closures for 2022, with the company already announcing plans to close more than 300 locations in the U.S. this year as part of their plan to add primary care clinics to existing stores. American Eagle will also be closing as many as 100 underperforming stores this year, as we’ve seen apparel that isn’t athleisure or luxury struggle throughout the pandemic.
With that being said, if anyone is wondering what to get me for my birthday in September, a $500 pair of Versace leggings wouldn’t be a bad place to start.