Retail sales for September were up 0.7% compared to August as consumers continue to spend despite economic concerns in the U.S. market. Sales from July through September were up 3.1% compared to one year ago, giving retailers a glimmer of hope for a positive holiday shopping season. September sales in 2023 were 3.8% higher than last year, indicating that consumers have not pulled back spending this year.
Total retail sales for all categories, minus autos and gasoline, were up 4.5%. “The resilience of retail sales this September underpins the adaptability and robustness of U.S. consumers. While certain sectors have experienced a downturn, like electronics and furniture, the overall landscape remains promising,” said Jonathan Silver, CEO and founder of Affinity Solutions.
Categories that remain strong relative to last year are restaurants and bars, up 9.7%; nonstore (including digital sales), up 6.2%; and discount stores, up 4.3%. “Drawing parallels from past data, I remain optimistic about the future trajectory of consumer spending. The foundational elements, such as consumer resilience and the adaptability of retail sectors, suggest a promising path forward, even amidst economic challenges,” said Silver.
Department stores were down 4.3% compared to last year, the steepest decline since June. Furniture and home stores and home improvement stores were down 6.5%. “Although spending on durable goods remains down, we can’t discount the significant recovery from the more substantial declines earlier this year. There’s a notable shift in consumer behavior, driven by external factors such as the state of the housing market,” said Silver.
Consumer Spending Is Robust For Nonstore Purchases
“We are witnessing a significant trend where spending at nonstore retailers, including giants like Amazon, continues to outpace traditional retail categories. With lowered shipping costs and the undeniable convenience of online shopping, it’s evident that the digital shopping experience remains paramount for many,” said Silver. Spending at nonstore retailers (including Amazon
AMZN
Physical Store Traffic Is Down In Some Categories
September monthly traffic was down 3.7%, the most significant decline since April 2023. “The end of the back-to-school shopping period’s traffic was softer in 2023 among our retailers, especially in August week four and most of September,” said Joe Shasteen, global manager of advanced analytics at RetailNext. Physical store traffic for apparel, footwear, home, and jewelry was down for the month, while health and beauty stores experienced increased foot traffic.
“The fluctuations in different retail categories offer a glimpse into the nuances of what retail looks like in today’s evolved landscape. Armed with these stats heading into the busy holiday season will equip brands to think outside the box in order to improve their traffic flow,” stated Shasteen. Average unit retail was up 2.2% due to higher priced goods and reflected in a 1.3% higher unit per transaction amount. September foot traffic to indoor malls was stronger than outdoor malls. “With a 3.7% year-on-year decline in traffic, it’s clear brands must work to earn consumer favor as shoppers’ behavior shifts because of economic forces,” said Shasteen.
Poised For The Holiday Season
Retailers are preparing for the holiday season and responding to shifts in consumer behavior, including using artificial intelligence and social media to drive online and offline shopping engagement.
Consumers are looking forward to using AI-based tools in their shopping journey to aid in product selection and the discovery of new brands, with 71% of respondents of the Shopify holiday survey stating that AI can help make shopping easier. Nearly a third (30%) of U.S. shoppers say they regularly or consistently use technologies like AI-powered shopping assistants to get personalized product and brand recommendations based on their shopping preferences. Also, nearly three-quarters of U.S. consumers (74%) said AI will make finding deals and special offers easier.
“It’s hard to overstate how powerful AI is when combined with commerce. It provides people with a whole new way to shop: curated recommendations based on your exact preferences and gift list, with the confidence that you’re finding the best deals the internet has to offer. AI is the superpower shoppers need this season to make the most of their holiday spending,” said Harley Finkelstein, president of Shopify.
Shoppers are increasingly eager to shop directly through social networks, with 44% of U.S. shoppers saying they would be willing to purchase products directly on Facebook and YouTube, 40% on Instagram, and 38% on TikTok. U.S. businesses are also expecting consumer spending to grow on social platforms, with 33% of those surveyed saying they believe social media platforms, out of all the selling surfaces, will provide the highest sales volume for them by the end of the decade ahead of even their online stores. “It’s go-time, and we’re ready as ever to power Shopify merchants and give them the tools they need for a successful holiday season. Every year, merchants around the world absolutely crush it with their deals, dedication, and delivery during the holiday shopping season, and this year is no different,” said Finkelstein.
The online survey was conducted by Sapio Research on behalf of Shopify and took place in September 2023 and included 2,000 consumers and 1,000 businesses (U.S. Survey).
Future Spending Is Predicted To Continue
“U.S. retail is on the rise, backed by strong employment and wages outpacing inflation. The recession noise has dimmed, but we’re keeping a close eye on upcoming challenges – from student loans to global tensions. As pandemic savings wane and inflation fatigue looms, this holiday season becomes pivotal for 2024’s kickoff,” said Silver.
Read the full article here