The reactions of consumers to inflation are starting to be seen as All Stores increase by 8.2% in May, and All stores Less Automotive, Food, Pharmacies up 8.75% (traditionally less effected by inflation compared to the “essential” categories).

The effects of inflation continue to grow major categories like Gasoline Stations (43.5%), Food and Beverage Stores (7.1%), Grocery Stores (7.9%), and Health and Personal Care Stores (5.8%), which is nothing new for 2022. However, May did see growth in a category that typically flies under the radar.

Miscellaneous Store Retailers saw a large growth of 26.9% year-over-year. One sector that is reported in this category is Used Merchandise retailers. With an increasing interest in sustainability, this was a sector that many experts were expecting to grow. But now, with supply chain restrictions decreasing the amount of product available, and energy and transportation costs increasing prices, we are expecting to see this category grow even further. We are seeing the effects of this in categories such as Electronics and Appliance Stores, down -4.4% year-over-year. Those who may have wanted to buy new electronics previously, now see buying used as not only the more economical option, but maybe the most convenient option for getting the product quickly.

Another notable category this month is Food Services and Drinking Places, which up 16.81%. Staff are starting to come back to work in restaurants, allowing restaurants to operate at max capacity. We see a positive outlook for this category moving forward with changes in delivery methods, such as automation in the commodity category.

With spring retail numbers being so high, will profits also rise as revenues increase throughout the summer and fall? Other questions we are asking are:

• Who are going to be the winners?
• What categories will be the most profitable despite higher costs?
• When will retailers start to feel the effects of a looming recession?
• Where are customers going to be shopping for their non-essential items?
• How are YOU going to innovate?

Reach out to JCWG for help innovating and preparing for the uncertain months ahead and join us next month to find out if June flips the script on retail’s current inflation-driven trajectory.