The Recent Retail Roller Coaster Ride

Updated: Apr 15


According to the US Census Bureau, retail sales inched up in August a modest .4% (seasonally adjusted) from July and up an unadjusted 4.6% year-over-year (excluding restaurants, automobile dealers, and gas stations). It is likely no surprise that online and non-store sales led the charge rising 1.6% month-over-month seasonally adjusted. Sporting goods and health/personal care retailers showed positive changes, while grocery, clothing, general merchandise, home furnishings were all down, and electronics and appliances remained unchanged. Meanwhile, to stay ahead of the ongoing tariff increases on virtually all consumer goods, a surge of new inventory is showing up in U.S. ports. According to Global Port Tracker, in July U.S. Ports handled 1.96 million 20ft. cargo containers or equivalent units, up 9.1% from June and up 2.9% year-over-year. The total number of units handled for 2019 is projected to be up .7% over a record-setting 2018, which was up 6.2% over 2017. Meanwhile, according to a recent report from The NPD Group, Navigating Pricing in a Post-Tariff World, consumer buying trends are shifting towards a balance of value versus price. As tariffs set-in, consumer purchasing is steadily becoming impacted more by product necessity and less by income and selling price. Products consumers consider to be "nice to have" may be in for a rude awakening in the near future, especially if the Federal Reserve Bank of New York estimates are correct that higher tariffs will increase a typical U.S. household's expenses by $831. Meanwhile, according to another recent report, Retail in the Red: BDO Bi-Annual Bankruptcy Update, retailers have already closed nearly 7,300 stores so far this year, which is more than any other full year. While the trend arguably started with private equity-backed retailers with insurmountable debt, both publicly and privately held retailers have entered the Chapter 11 pipeline, usually ending up in a store pare-back or liquidation strategy. If predictions made by Coresight Research are close to correct, a total of 12,000 stores could close by the end of the year. It is all but imperative for retail to have a strong holiday season. If consumers, the main factor supporting GDP growth, tighten their belts in the near future, brace yourself for a wild ride.

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