Retailers just blew through headwinds to post January sales gains
Neither the Omicron variant, bad weather nor inflation proved to be enough to slow consumer spending in January as retail sales increased 3.8 percent from the month prior, according to U.S. Census Bureau figures. Year-over-year sales were up 13 percent.
The gain in January followed a revised 2.5 percent drop in December after November’s record performance as Americans began their Christmas shopping early in 2021. December’s year-over-year sales, considered a better indicator, were up 16.7 percent.
“January sales overcame major headwinds that make the results all the more impressive,” Jack Kleinhenz, chief economist at the National Retail Federation, said in a statement. “A triad of forces weighed on consumer behavior and spending as weather slammed a large portion of the United States, the omicron variant was relentless and inflation was escalating. On top of that, the enhanced child care tax credit ceased at the end of 2021, impacting millions of families. Despite all that, consumers ramped up spending even after a record-breaking holiday season.”
“While the year ahead has challenges with inflationary pressures, labor shortages, COVID-19 impacts and uncertainty related to international tensions in Russia and China, today’s numbers show that despite these concerns, consumers are spending, and the economy remains in good shape,” said Matthew Shay, NRF president and CEO. “We are confident that retail sales growth and overall consumer financial health can continue, and current pressures in the economy should be moderated if election-year political pressures don’t result in policy decisions that compound the challenges our economy is already facing.”
A breakout of individual retail verticals shows broad-based sales strength in January:
- Clothing and accessory stores were up 0.7 percent month-over-month and 19.1 percent year-over-year;
- Building materials and garden supply stores rose 4.1 percent month-over-month and 12.7 percent year-over-year;
- Online and catalog sales were up 14.5 percent month-over-month and 8.9 percent year-over-year;
- Health and personal care stores declined 0.7 percent month-over-month but rose 7.7 percent year-over-year;
- Grocery and beverage stores were up 1.1 percent month-over-month and 7.2 percent year-over-year;
- General merchandise stores increased 3.6 percent month-over-month and 6.4 percent year-over-year;
- Furniture and home furnishings stores were up 7.2 percent month-over-month and 1.5 percent year-over-year;
- Sporting goods stores fell 3.0 percent month-over-month but declined 0.8 year-over-year;
- Electronics and appliance stores were up 1.9 percent month-over-month and fell 3.0 percent year-over-year.
- January Retail Sales Overcome Omicron and Inflation to Show Strong Gains – National Retail Federation
DISCUSSION QUESTIONS: How much of a factor did inflation play in retail’s sales numbers for January? What factors do you think are most likely to challenge the industry’s sales growth in 2022?