Marcus & Millichap: Retail Sales
September 23, 2022 | Marcus & Millichap
Inflation Clouds Stellar Sales Total as Consumers Go Shopping
Pair of drivers back positive retail momentum. Store-based retail sales, which exclude automotive and gas purchases, as well as those made online or at bars and restaurants, ascended to a record mark in August. Much of this gain, however, was likely driven by rising prices, as inflation has sustained levels above 7 percent so far this year. Nevertheless, even after adjusting for inflation, core retail sales are up nearly 19 percent from the pre-pandemic tally, aided by a record national job count and easing gas prices, which are freeing up households’ wallets for in-store purchasing. An ongoing shift in consumer behavior, one with an emphasis on physical locations, is providing additional support, with foot traffic at most store types near or above 2019 levels. Store-based sales momentum has the potential to remain positive as the holidays approach and consumers seek out deals earlier than in prior years.
Return-to-class a boon for brick and mortar. Apparel, general merchandise and sporting goods retailers all benefited from back-to-school season, with each store-based segment posting record sales volume in August. Estimates placed household spending for the school return at a rough average of $860 for an elementary or high school student, a 24 percent increase over 2019. Meanwhile, household back-to-college spending was expected to be approximately $1,200, up 23 percent from 2019. College town retailers that operate within these segments may notch another record sales tally in September, as classes commence at many colleges nationwide during the latter half of the month.
Restaurant patronage a steady share of core sales. Dining establishments and bars are also benefiting from widespread job growth and consumers’ desire for social interaction. The segment’s share of core retail sales held in the 17 percent range — a pre-pandemic level — for a seventh straight month in August. This consistency indicates individuals and families are dining out and socializing much like before, despite higher prices, behavior that has positive implications for retail demand moving forward.
