Flying shopping cart with shopping bags on a pink background. Shopping Trolley. Grocery push cart. … [+]
This past week, the Census Bureau released the monthly advanced estimates for retail and foodservice sales in July. The report itself is short but sweet and nicely outlines the habits of the American consumer. It also provides a blueprint for how much consumers are spending, and, equally of importance, for where consumers are spending their money. Of particular interest during this time of year are the Summer and Back-to-School spend trends. The year’s inflation coupled with hot weather have had their impacts, as have higher prices overall on specific items.
Let’s take a look at what consumers bought this time around.
In an update, Neil Saunders, managing director of GlobalData noted a “modest softening in growth.” Even so, “Retail sales ticked up solidly in July—posting an 8.6% increase over the same period last year. That said, almost all of this was the result of inflation, so retail volumes remain flat to slightly down.”
Saunders’ sentiment bears out. Total advance monthly sales were $682.8 billion in July, according to the Census Bureau, a number that came in relatively flat compared to revised June sales of $682.6 billion.
These overall tepid results probably come as a sting retailers even more as we consider that around this time last year, consumers were purchasing goods at higher rates. Chip West, a retail and consumer behavior expert at Vericast, says that consumers are in a pivot, prioritizing essentials over fun and waiting for better or best deals in some instances. “People are shopping at discount stores for groceries and turning towards quick-service restaurant (QSR) dining [like McDonald’s or Burger King] over casual dining to save money.”
UNITED STATES – Circa 1950s: Female Grocery Cashier Ringing Purchases.
If consumers are tightening their proverbial belts in droves, the big question, then, is what, if anything, did consumers spend more money on this time around? West’s observation about food and drink is spot on, with consumers spending $86 billion in July, slightly above the $85,991 billion they spent in June. A bit less was spent at both automotive shops ($124,948 billion compared to $127,022 billion in June) and gasoline stations ($67,440 billion compared to $68,658 billion in June.) “The good news for the consumer is that gas prices are coming down, even if they remain far higher than they were a year ago,” writes Saunders. “This is noticeable in gas station sales which increased by 38.5% over last year—a far lower pace of uplift than the past two months.”
We took slightly more care of ourselves and our homes in July, according to the report. Health and personal care spending etched slightly higher in July to $33,623 billion, compared to $33,485 billion in June, and building supply and gardening equipment shops reported $42,655 billion in July, slightly up from $42,042 in June. Meanwhile, food and beverage barely moved to $78,964 billion from $78,803 billion in June.
Other categories, such as furniture and clothing stores, were either slightly up or down, continuing to paint a less-than-robust consumer profile for the month of July.
“Consumers are putting off buying expensive, discretionary purchases like electronics, so back-to-school shopping will likely continue in the coming months,” writes West.
Saunders affirms, “Retailers are having to deal with this slower demand environment at a time when their own costs are rising rapidly, which is one of the reasons we are seeing so much deterioration in both margins and profitability.”
We are definitely in those proverbial “dog days” of summer and it looks like the retail sector has felt some of that sentiment in the form of less traffic and slower sales. That said, West expects to see back-to-school shopping stretch out into the coming months. “Additional back-to-school shopping trends that are likely to carry-forward similarly to holiday include starting shopping earlier [and] spreading out shopping over several pay periods as larger share of budgets are going to food, fuel, housing, etc.”
The next round of monthly sales numbers is expected on September 15.
Author’s Note: Unless otherwise indicated, dollar amounts in this article are adjusted for seasonal variation and for holiday and trading day differences, but not for price changes.
Source: https://www.forbes.com/sites/gracelwilliams/2022/08/20/the-spending-breakdown-heres-what-we-bought-in-july-according-to-the-census-bureau/