Is January Setting the Trend for US Retail Sales in 2023?
Original release date: February 15, 2023
It seems that the double digit year-over-year growth experienced through 2022 has come to its inevitable end for 2023, with US retail sales in January growing 6.7% YOY for All Stores and All stores Less Automotive, Food, Pharmacies also up 8.8% YOY.
January is typically a slow month for retail sales. Coming off the heals of holidays, large Boxing Day sales, and in 2023 an even larger Black Friday. Seeing Food and Beverage Stores, Grocery Stores, and Gasoline Stations grow only 5.3% YOY, 5.8% YOY, and 5.1% YOY was a little surprising considering the inflation that we saw through 2022. Two larger elements affecting the US retail sales in January include:
- January saw the lowest unemployment rate in the US since 1969, only 3.4%. When people feel secure in their jobs, even during a period of recession, they are willing to spend more of their discretionary income.
- January also saw a cost of living adjustment the approximately 70 million Americans that receive Social Security and Supplemental Security Income, which increase by 8.7%.
Food Services and Drinking Places found further growth in January with an increase in 24.0% YOY. This is something that is highly affected by inflation in food prices. As previously stated, people do not stop eating in restaurants when facing a recession, they just change where they eat for lower cost restaurants. With that being said, it is still surprising to see these sales increase to such a degree in January. Not only are there significantly less patios open, lowering the number of tables, but this industry is heavily affected by the ongoing labour shortage.
January may be setting a new trend in retail sales in 2023. 2022 was a volatile year for inflation, employment, recession, and supply chains. A low unemployment rate while also being in the midst of a recession, but also having major tech companies laying off employees, there is little telling what is in store for 2023. Some things we are thinking about for 2023 are:
- With such a low unemployment rate, will employees start spending more of their discretionary income (even during a recession)?
- What categories will customers spend their discretionary spending on now that they feel better job security?
- Where will the tech employees being affected by layoffs be looking for employment?
- How have YOU prepared for 2023?
For 2023 retail strategy and forecasting support, reach out to JCWG. We have also released this year’s highly anticipated “Retail Innovations 18” book, please visit the download page here. We are also hosting our free webinar series “Retail Trends Tuesday” throughout the month of February, sign up here!