US NRB October 2022

More than Meets the Eye for October US Retail Sales

Original release date: November 16, 2022

The US retail market grew slowly (considering inflation) in October by 7.9% for All Stores YOY, with All stores Less Automotive, Food, Pharmacies also up 7.9% YOY. Considering inflation was 7.7% in October for the US, it seems that sales are starting to stagnate.

It was expected that Nonstore Retailers would start to slow, as we are seeing reports of tech giants like Amazon laying off staff, but the category saw double digit growth at 11.8% YOY. This news seems to have been curbed by Amazon’s prime day on October 11-12. October’s revenues for this event are not clear yet, but considering the last prime day saw sales over 300 million items sold, we are expecting this to have been a major factor to revenue growth.

As retailers and customers are prepping for the holiday season earlier and earlier, it is surprising to see that Department Stores were down by -1.7% YOY this month. As inflation continues to rise, customers have clearly changed their habits. For example, Target’s profits fell around 50% in Q3, while Walmart (a much more budget friendly option), saw gains. Grocery sales, which were up only 7.2% YOY, contributed significantly to Walmart’s increased earnings, according to CEO Doug McMillon. Their budget-friendly merchandise and food seems to be resonating with customers who are looking to cut-back on their spending.

Discretionary categories continue to be hit hard by the rising cost of living, with categories like Clothing and Accessories Stores, Furniture and Home Furnishings Stores, and Electronics and Appliances Stores all seeing decreases in October of -1.7% YOY, -0.6% YOY and -12.3% YOY respectively. These decreases were pretty well expected due to inflation, but one that was surprising was that Food Services and Drinking Places was up 12.9% YOY. According to JCWG’s foodservice consultants, this is actually on trend with inflation even though going out to eat is technically discretionary spending. Customers don’t actually go out to eat less in times of inflation, their frequency remains the same. In fact, it is their choices that change, typically going to lower price, value restaurants and fast-food retailers.

As we are in the middle of the holiday season with a high cost of living, we are mainly thinking about categories and merchandise that will be the most sought after:

  • Will electronics be as popular of a gift as they were in the past (now that they are expensive and there is less supply)?
  • Who will be the outliers in holiday, seeing improvements over 2021?
  • What are customers most looking to save on this Black Friday?
  • When will retailers start their Boxing Day (or week, or longer) sales?
  • How will YOUR merchandise mix change to match the recession consumer?

Reach out to JCWG for support with your merchandise mix to keep your sales high while your customers look to spend less. Join us next month to see how spending changes in November.


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