US NRB July 2022

Discretionary Spending Continues to Decrease in July

Original release date: August 17, 2022

The US retail market experienced a growth of 8.7% for All Stores YOY, with All stores Less Automotive, Food, Pharmacies up 8.5% YOY.

It seems that the Nonstore Retailers category was the biggest winner in July, with a YOY growth of 18.1%. This boost in sales, which is contrary to the trends we have been seeing, is likely thanks to July 12/13 being “Prime Day” at Amazon. They saw their most orders ever placed compared to previous years, with customers making 300 million purchases.

With the changes in the housing market, we are seeing Electronics and Appliance Stores along with Furniture and Home Furnishings Stores down YOY -11.3% and -0.3% respectively.

People are needing to sell their houses and start renting with interest rates soaring, leading to less people spending. Not only that, but large appliances and furniture are not a part of consumers discretionary budgets (unless they break). We are seeing this trend in businesses like Best Buy, who have cut hundreds of jobs in its stores in anticipation of continuing decline in demand.

General Merchandise Stores are down -0.2% YOY, which may not seem like much, but may be reflecting some major disruptions in the future. Mid/late-July is the beginning of Back-to-School season, and the fact that these stores are not seeing revenue increases is telling. We see large general merchandise/department store retailers like Walmart (who has recently laid off 200 corporate employees) and Target (with operating income down 87% from last year) struggling with inventory and changes in consumer demand. Target has been marking down inventory and saying their fall receipts on discretionary categories have been reduced by $1.5 billion. Walmart has said similar, saying they have “seen more pronounced consumer shifts and trade down activity… The rising costs for essential items and customers reprioritization spend led to significant mix shifts in (their) business.”

Retailers are reacting to consumer shifts, and that adjustment has come with some lost profits and layoffs. However, there is hope with back-to-school in full swing and the holidays just around the corner. This month we are asking:

  • Who will consumers be shopping with for this year’s holiday season?
  • What retailers are able to avoid layoffs?
  • When will consumers become less cautious?
  • Where are customers relocating to and what retail offerings are available?
  • How will YOU capture your customer’s discretionary spending?

Reach out to JCWG for how to maintain your customer’s discretionary spending, even in the time of uncertainty. Join us next month to see if August sees it’s traditional back-to-school boost in retail sales.


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