Consumer Sentiment And Retail Sales UP

According to comments by Neil Saunders, Managing Director of GlobalData Retail, focus on month-on-month seasonally adjusted numbers do not give a picture of the real state of retail, but rather the unadjusted year-over-year figures provide a much more accurate view of performance. On this basis, retail is doing well with total sales up by 5.2%, the highest rate of growth since January. Such an increase is aligned with the rise in consumer sentiment and the more robust numbers coming out of other areas of the economy.

Higher gas prices contributed to the overall uplift - although price increases were more moderate in May, which resulted in the lowest rate of increase since November of last year. This brake on pump prices was one of the things that helped to fuel consumer confidence over the period, especially around the Memorial Day holiday when spending was elevated.

Pure retail spend, which excludes foodservice, gasoline, and automotive sales, saw a healthy increase of 5.3% on a year-over-year basis, says the report. This is the highest level of growth since November of last year, and well above the average growth rate of the year-to-date. Consumer data shows that while shoppers are not in splurging mode, they are becoming more relaxed in their spending habits.

On a sector basis, home improvement was the standout category with sales up by 14.2%. Good levels of activity in the housing market, and an upswing in the number of people undertaking outdoor projects, both aided the sector. Furniture and home retailers also benefited from the wave of demand from the housing market, posting a 6.7% rise in sales for May.

However, says the report, department stores posted negative growth with sales down 3.1% on the prior year. Store closures, lower customer traffic, weaker conversion rates over the month, and higher discounting all contributed to the poor outcome. Electricals remained in decline, though some robust demand around Memorial Day was offset by more discounting in the sector, together with continued weaker demand for tablets and smartphones. 

the level of growth posted this month is unlikely to be sustained over the remainder of summer, says the report. If interest rates continue to rise, more consumers are becoming concerned about the impact of higher interest payments on their various debts.

Though the forecast for 2017 remains solid, concludes the report, the GlobalData Retail Team posits that growth will be patchy and not benefit all retailers. The pattern of winners and losers is set to continue.

For additional information from GlobalData, please visit here.



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