Every month, the U.S. Department of Commerce’s Census Bureau releases its initial calculation of the previous month’s retail sales. At Retail Dive, we report on the results for core retail segments, excluding food, auto, and fuel, using year-over-year comparisons. In May, retail sales within these core segments rose by 4.5% compared to the previous year, with e-commerce seeing a significant surge of 6.4%, according to the figures released by the U.S. Department of Commerce on Tuesday.
The report highlighted the enduring resilience of consumers despite ongoing challenges such as continued inflation, rising debt, and economic uncertainty, as noted by analysts. Restaurants, however, bore the brunt of consumer caution in spending, while core retail segments remained robust, according to Neil Saunders, Managing Director at GlobalData. This trend may be attributed to inflation being more prominent in services than in goods prices, as suggested by a report from the National Retail Federation. The group, which now utilises credit card data instead of government figures to calculate monthly sales, found that core retail sales in May, excluding restaurants, automobiles, and gasoline, increased by 2.88% year over year.
This trend may persist throughout the summer, with many consumers indicating they are cutting back on spending for experiences such as home entertainment, dining out, travel, and vacations, according to the KPMG Consumer Pulse Survey, also released on Tuesday.
Certain retail sectors experienced declines last month. Home goods sales continued their downward trend, falling nearly 6%, while sales at sporting goods and hobby stores decreased by nearly 2%. On the other hand, electronics stores continued their recovery, with sales up by 3%. Apparel sales saw a 4.5% increase, contributing to a 0.7% growth at department stores. This uptick in department store sales not only signals consumer confidence but also reflects the improved customer experience at many of these retailers, as noted by Saunders.
While consumers showed up for retailers in May, Saunders cautioned that their reluctance to spend could increase as the year progresses. “The subtle changes in buying behaviours – more caution, more shopping around, more concern for value, more bargain-seeking – should not be overlooked,” he said. “This is not a terrible retail economy, but it is one in which the consumer remains skittish.”
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