US NRB February 2023

US Retail Sales Growth Lower than Inflation in February?

Original release date: March 15, 2023

US retail sales in February experienced a growth 5.6% YOY for All Stores and All stores Less Automotive, Food, Pharmacies also up 8.5% YOY. With years prior to the pandemic as a baseline, this growth is impressive. However, when inflation in the US reached 6% in February, the increase in retail sales is more than meets the eye.

There are two winners in February 2023 US retail as we continue through a period of high inflation and recession: Experiences and discounts.

  • Experiences are experiencing the growing impact of the pandemic limiting travel, and Millennials/Gen Z becoming a larger percentage of spending. These generations are much more willing to spend on experiences than previous generations, and when this is coupled with the fact that for over a year they were not able to travel or go to concerts, this pent up demand continues to perform. With this being considered, it is not surprising to see Food Services and Drinking Places grew 15.1% YOY since people eat out more when travelling. Outside of US retail sales reports, spending on airlines and lodging increased by 15.6% and 42.7% YOY respectively, according to Mastercard SpendingPulse.
  • In periods of recession, consumers are looking to save money wherever possible, but specifically with food. Food and Beverage Stores and Grocery Stores saw a modest growth of 5.6% YOY and 5.8% YOY respectively (below the rate of inflation), coupled with an increase in 10.7% YOY in General Merchandise Stores. JCWG thinks this proves the likes of Costco, Walmart, etc. are capturing the Food and Beverage demand better than ever before.

When comparing revenues to January 2023, nearly all categories of US retail sales are down. The only categories that saw continued growth over January are:

  • Department Stores (Excluding Leased Departments): 0.9% MOM
  • Clothing and Accessories Stores: 9.2% MOM

These two categories saw modest growth (3.5% and 7.9% YOY respectively) in January, a month typically slow for retail. Likely in part, due to customers redeeming gift cards they have been sitting on with pandemic restrictions on the category as well as continued moves back to office. 

February is following 2023’s trend of retail sales behaviours during a recession, and on the heels of continued reactions to COVID-19 lockdowns. With US retail sales now growing at a lower rate than the inflation rate, some questions that JCWG has include:

  • When inflation starts to ease, will customers continue shopping for grocery at large, general merchandise stores?
  • Have retailers who lost consumers due to the recession lost them for good? How can they be retrieved?
  • How are YOU preparing your retail business for better customer experience?

For support in improving your customer experience, reach out to JCWG. For more inspiration, join us March 29, 2023 as the JCWG team is hosting a virtual tourreviewing our recent trip with our international partners in the Ebeltoft Group to Germany, which included EuroShop 2023 and store tours in Düsseldorf and Cologne, sign up here!

We have also released this year’s highly anticipated “Retail Innovations 18” book, please visit the download page here.


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