Retail sales are up, but not for everyone
With prices rising for everything from fresh vegetables to office tables, consumer purchases tend to decline as households tighten their budget belts. While some retailers are witnessing this tightening, sales in general remain strong in the latest manifestation of a highly erratic and uneven economy.
Retail sales in July increased by more than 10% nationally on an annual basis, according to the most recent figures published by the Census Bureau. Compared to June, sales were virtually unchanged.
Matthew Shay, president and CEO of the National Retail Federation, said the cost of gasoline has come down significantly from what it was, which appears to have given families more leeway and a discretionary purchasing power.
“Retail sales increased in July, supported by lower gas pump prices and moderately weaker inflation,” Shay said in a statement. “Consumers are adjusting to higher prices by prioritizing essentials like food and back-to-school items, and retailers are working hard to absorb the impact of higher costs and help customers get the most out of their hard-earned dollars. won.”
Inflation assessment Consumer price index has been increasing month by month for over a year now. In June, it rose more than 9%, its highest annual growth rate since the 1980s. In July, CPI growth eased slightly to 8.5%, suggesting to some that inflation may have reached its maximum.
Lower gasoline prices contributed to the decline. Since August 22, a gallon of regular unleaded has been selling for an average of $3.88, according to the Energy Information Administration. That’s down from over $5 a gallon earlier this summer and over $4 two weeks ago. Compared to the same period last year, however, the cost of gasoline remains quite high. The average then was $3.15, according to government data.
Sluggish sales for major brands
Despite lower gasoline prices and overall higher retail sales, demand was weak for a number of retailers, resulting in a glut of inventory. Department store Kohl’s said on an earnings call that due to slower customer activity, the company plans to cut prices on many of their merchandise before the end of the year. Kohl CEO Michelle Gass noted the move was necessary with 2023 around the corner and the holiday season even closer.
“We clear the goods,” Gass said. “We’re eliminating receipts and promoting more.”
She added that while no one can predict the future, she is confident that lower prices will encourage shoppers to visit their stores and online checkouts.
Other large big-box retailers have encountered similar inventory dilemmas, such as Target and Walmart. In addition to lowering prices, Walmart is leveraging technology to make inventory management easier. The strategies have worked so far, noted John David Rainey, Walmart’s executive vice president and chief financial officer. As CIO Dive reported, Walmart is take advantage of augmented reality technology to reduce inventory and speed up fulfillment processes.