Article

Retail sales stagnate in September due to inflation

inflation’s impact on retail spending could mean a mixed outlook for the holidays

October 27, 2022

Contributors:

Ebere Anokute

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US retail sales flat in September

It looks like all the messaging around inflation has finally begun to impact us after all. After many consecutive months of increases post-COVID, U.S. retail sales flattened in September, totaling $680 billion to match August’s revised total. General merchandise and food & beverage stores saw modest monthly gains at 0.7% and 0.4%, respectively, but were weighed down by equivalent losses in the home furnishings and auto dealer categories.

Monthly and yearly change in spending

Despite stifled monthly sales volumes, retail sales were up 8.2% over the same period last year, equaling the rise in the consumer price index. Inflation caused most categories to show year-over-year increase, including an 11.6% increase for nonstore retailers and a 6.4% increase for food and beverage stores. Electronics stores, a category greatly disrupted by e-commerce, was the only one to see both yearly and monthly declines, with sales down 8.6% year-over-year and 0.8% since August.

This context contributes to a mixed outlook for the holidays. JLL’s recently released 2022 Holiday Survey detailed a “tale of two yuletides,” wherein lower income shoppers indicated plans to cut their budgets significantly, while fewer higher income shoppers felt the same financial strain. With increased spending in nonstore retail indicating that shoppers might be shopping for the holidays earlier and online, it looks like we’re going to need to see some serious Black Friday deals to jump start the in-store holiday shopping season.

Source: WWD

Digitally native retailers ramp up store expansions

Despite the news in consumer spending, fundamentals in the real estate market remain sound, encouraging retailers across categories to lean into their physical store strategies. Several digitally native brands have recently announced new store openings, looking to optimize the omnichannel offerings which we know to be successful.

SoHo in New York City has long been a hotspot for digitally native retailers – a reputation that contributed to Alpha Industries decision to go there for its first brick-and-mortar store this year. The apparel brand will sell out of 3,000 square feet at 19 Greene Street, for those in need of a plush bomber jacket just in time for the cold weather months.

Warby Parker, which opened its 8th New York City store earlier this year, is showing no signs of slowing down. The once online-only eyewear company currently operates 190 stores and plans to open “hundreds” more across the US over the next five years.

Digitally native brands have also found success in new cities, such as the Georgetown neighborhood of Washington, D.C. Thanks to a new partnership with Leap, a service that helps online retailers open and operate physical stores, leather brand Hobo joined cashmere brand Nadaam and makeup giant Glossier as recent entrants to the Georgetown market, augmenting the growing base of DTC brands in the area.

And in Miami, Pharrell Williams has found a home for his fashion brand Billionaire Boys Club. The company will open its fourth physical location in the Wynwood neighborhood later this year.