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Tag: Retail and wholesale sector performance

  • Inflation hovers over shoppers seeking deals on Black Friday

    Inflation hovers over shoppers seeking deals on Black Friday

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    NEW YORK — Cautious shoppers hunted for the best deals at stores and online as retailers offered new Black Friday discounts to entice consumers eager to start buying holiday gifts but weighed down by inflation.

    Due to elevated prices for food, rent, gasoline and other essentials, many people were being more selective, reluctant to spend unless there was a big sale. Some were dipping more into savings, turning to “buy now, pay later” services that allow payment in installments, or running up their credit cards at a time when the Federal Reserve is hiking rates to cool the U.S. economy.

    Sheila Diggs, 55, went to a Walmart in Mount Airy, Maryland early Friday looking for a deal on a coffee maker. To save money this year, she said the adults in her family are drawing names and selecting one person to shop for.

    “Everything’s going up but your paycheck,” said Diggs, who manages medical records at a local hospital.

    This year’s trends are a contrast from a year ago when consumers were buying early for fear of not getting what they needed amid supply-network clogs. Stores didn’t have to discount much because they were struggling to bring in items.

    Early shopping turned out to be a fleeting trend, said Rob Garf, vice president and general manager of retail at Salesforce, which tracks online sales. People this year are holding out for the best bargains, and retailers responded this week with more attractive online deals after offering mostly lackluster discounts earlier in the season.

    Online discounts rates were 31% on Thanksgiving, up 7% from the previous year, according to Salesforce data. The steepest discounts were in home appliances, general apparel, makeup and luxury handbags.

    Macy’s Herald Square in Manhattan, where discounts included 60% off fashion jewelry and 50% off select shoes, was bustling with shoppers early Friday.

    The traffic was “significantly larger” on Black Friday compared to the previous two years because shoppers feel more comfortable in crowds, Macy’s CEO Jeff Gennette said.

    He said that bestsellers from Macy’s online sale, which started last weekend, included 50% off beauty sets. Last year Macy’s, like many other stores, had supply chain issues and some of the gifts didn’t arrive until after Christmas.

    “Right now we are set and ready to go, “ he said.

    Sophia Rose, 40, a respiratory specialist visiting Manhattan from Albany, New York, was heading into Macy’s with big plans to splurge after scrimping last year when she was still in school. She put herself on a budget for food and gas to cope with inflation but had already spent $2,000 for holiday gifts, and plans to spend a total of $6,000.

    “I am going to touch every floor,” she said. “That’s the plan.”

    Customer traffic was also higher than last year at Mall of America in Bloomington, Minnesota, according to Jill Renslow, executive vice president of business development of the shopping center. She said 10,000 people were at the sprawling mall during the first hour after the 7 a.m. opening, though inflation prompted many shoppers to figure out what to buy before showing up.

    “With the economy, people are planning a little more,” she said.

    Delmarie Quinones, 30, went to a Best Buy in Manhattan to pick up a laptop and printer she ordered online at $179, down from $379. Quinones, a health home aide, said that higher prices on food and other expenses are making her reduce her spending from a year ago, when she had money from government child tax-credit payments.

    “I can’t get what I used to get,” said the mother of five children, ages 1 to 13. “Even when it was back to school, getting them essentials was difficult.”

    Major retailers including Walmart and Target stuck with their pandemic-era decision to close stores on Thanksgiving Day, moving away from doorbusters and instead pushing discounts on their websites.

    But people are still shopping on Thanksgiving — online. Garf said Salesforce data showed online sales spiked in the evening during the holiday this year, suggesting people went from feasting to phone shopping. And with holiday travel up, he said a greater share of online shopping occurred on mobile devices this year.

    “The mobile phone has become the remote control of our daily lives, and this led to an increase in shopping on the couch as consumers settled in after Thanksgiving dinner,” Garf said.

    But with more shoppers visiting stores this year, growth in online sales slowed.

    Shoppers spent $5.3 billion online on Thanksgiving Day, up 2.9% from the holiday last year, according to Adobe Analytics, which monitors spending across websites. Adobe expects that online buying on Black Friday will hit $9 billion, up just 1% from a year ago.

    Black Friday saw some of the labor unrest that has rippled through the retail industry over the past year. A coalition of trade unions and advocacy organizations are coordinating strikes and walkouts at Amazon facilities in more than 30 countries under a campaign called “Make Amazon Pay.” Among other places, hundreds of workers at a facility near the German city of Leipzig staged a protest Friday, calling for better working conditions and higher pay.

    And at Walmart stores, some employees had Wednesday’s deadly shooting at a company store in Virginia in the back of their minds.

    Jude Anani, a 35-year-old who works at a Walmart store in Columbia, Maryland, said the company offers training on how to react in such circumstances but he would like to see more protection. He was happy to see police officer standing outside the store, as is typical on Black Friday, and wished that was the case “most of the time during the year.”

    Against today’s economic backdrop, the National Retail Federation — the largest retail trade group — expects holiday sales growth will slow to a range of 6% to 8%, from the blistering 13.5% growth of a year ago. However, these figures, which include online spending, aren’t adjusted for inflation, so real spending could even be down from a year ago.

    Analysts consider the five-day Black Friday weekend, which includes Cyber Monday, a key barometer of shoppers’ willingness to spend. The two-month period between Thanksgiving and Christmas represents about 20% of the retail industry’s annual sales.

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    Hadero reported from Mount Airy, Maryland. Olson reported from Arlington, Virginia. Associated Press Personal Finance Writer Cora Lewis in New York contributed to this report.

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    Follow Anne D’Innocenzio: http://twitter.com/ADInnocenzio

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  • US retail sales rose 1.3% last month, a sign of resilience

    US retail sales rose 1.3% last month, a sign of resilience

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    WASHINGTON — Americans stepped up their spending at retailers, restaurants, and auto dealers last month, a sign of consumer resilience as the holiday shopping season begins amid painfully high inflation and rising interest rates.

    The government said Wednesday that retail sales rose 1.3% in October from September, up from a flat reading in September from August. The increase was led by car sales and higher gas prices. Still, excluding autos and gas, retail spending rose 0.9% last month.

    Strong auto sales may have been supercharged by the arrival of Hurricane Ian in late September, which destroyed up to 70,000 vehicles, according to economists at TD Securities.

    Even adjusting for inflation, spending increased at a solid pace. Prices rose 0.4% in October from September. The government’s solid report contrasted with gloomy figures Wednesday from retail chain Target, which announced unexpectedly weak profits as its increasingly price-sensitive customers pulled back on spending.

    Steady job growth, rising wages, and higher savings after many people cut back on travel and entertainment during the pandemic have enabled surprisingly steady spending by consumers, particularly those with higher incomes.

    Economists pointed to two other factors that likely contributed to the gain: Amazon held another Prime Day promotion last month, and California distributed inflation relief checks of up to $1,050.

    Yet there are ongoing signs that cracks are forming in consumers’ ability to keep up with the highest inflation in four decades. More households are relying on credit cards to pay bills, with nationwide credit card balances jumping 15% in the July-September quarter from a year ago, the largest year-over-year increase in two decades, according to a report Tuesday from the Federal Reserve Bank of New York.

    “Consumers are likely turning to credit to support spending as wage growth lags inflation and high prices are eating away from the stock of savings,” said Jeffrey Roach, chief economist for LPL Financial.

    And research last week from Bank of America found that consumers are increasingly seeking out cheaper options when it comes to groceries and dining out. Transactions by Bank of America customers, using credit and debit cards, show that they are now visiting cheaper fast food restaurants more often than full-service restaurants, after eating at both equally for about a year after the spring of 2021.

    The Bank of America report also found that, adjusting for inflation, grocery spending per household has fallen sharply, to below pre-pandemic levels, even though visits to grocery stores haven’t fallen. That suggests many people are seeking out cheaper options when shopping for food.

    Still, analysts said Wednesday’s government report on retail sales points to a healthier economy than previously expected. Morgan Stanley revised its forecast for growth in the October-December quarter to 1.7% at an annual rate, up from an earlier projection of 0.7%.

    Strong consumer demand could perpetuate inflation, but other trends may work in the other direction. Auto sales jumped 1.3% last month, the retail sales report showed, but that gain, in addition to people replacing cars in Florida, partly reflects a clearing of supply chain problems that have made more auto parts and semiconductor chips available. Auto production has rebounded, leading to greater supply, which can push prices down.

    Gas station sales jumped 4.1% last month, though that largely reflected higher prices. Online sales rose 1.2%, and restaurant and bar sales moved up 1.6%.

    Walmart, the world’s largest retailer, reported strong sales growth Tuesday in its third quarter, as more shoppers, including higher-income ones, sought out its cheaper groceries.

    The company said that consumers are trading down to private brands in baby items and baking goods, among other categories. It is also seeing wealthier customers. About three-quarters of Walmart’s market share gains in food came from customers with annual household incomes of $100,000 or more, the company said.

    Inflation reached 7.7% in October from a year ago, down from a peak of 9.1% in June but still a level that hasn’t been seen in 40 years. There are some signs that prices are likely to keep declining as many supply chain snarls have unraveled, boosting stockpiles of goods at many stores. Some chains may soon have to resort to discounting to clear excess merchandise.

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  • Retail sales flat in September as inflation takes a bite

    Retail sales flat in September as inflation takes a bite

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    NEW YORK — The pace of sales at U.S. retailers was unchanged in September from August as rising prices for rent and food chipped away at money available for other things.

    Retail sales were flat last month, down from a revised. 0.4% growth in August, the Commerce Department reported Friday. Retail sales fell 0.4% in July.

    Excluding sales of automobiles and at gas stations, retail sales rose 0.3%. Excluding gas sales, spending was up 0.1%

    While the report showed the resilience of the American consumer, the figures are not adjusted for inflation unlike many other government reports. In fact, sales at grocery stores rose 0.4%, helped by rising prices in food.

    Evidence that the Fed’s fight to cool the economy may be taking hold can also be seen, particularly with big-ticket items. Sales at auto dealers fell 0.4% last month, and shoppers continued to pull back on appliances, electronics and furniture, all categories that did well during the early part of the pandemic. Business at consumer electronics and appliance stores fell 0.8%.

    Sales at clothing stores rose 0.5%, while business at department stores rose 1.3% That indicates a solid back-to-school season but adjusted for inflation, spending was modest, analysts said. Business at restaurants rose 0.5%, while online sales ticked up at the same pace.

    Neil Saunders, managing director of GlobalData Retail said the report was “representative of an economy that is tightening and of a shopper that is becoming more discerning and cautious about what they buy.”

    Consumer spending accounts for nearly 70% of U.S. economic activity and Americans have remained mostly resilient even with inflation near four-decade highs. Yet surging prices for everything from mortgages to rent have upped the anxiety level. Overall spending has slowed and shifted increasingly toward necessities like food, while spending on electronics, furniture, new clothes and other non-necessities has faded.

    “Even if people are employed and on paper look reasonably comfortable they are not feeling comfortable, and they are very concerned about what’s to come next,” said Joel Rampoldt, a managing director in the retail practice at AlixPartners.

    Inflation in the United States accelerated in September, with the cost of housing and other necessities putting more pressure on households, eliminating pay gains and almost guaranteeing that the Federal Reserve will keep raising interest rates aggressively.

    Consumer prices, excluding volatile food and energy costs, jumped 6.6% in September from a year ago — the fastest such pace in four decades. And on a month-to-month basis, core prices surged 0.6% for a second straight time, defying expectations for a slowdown and signaling that the Fed’s multiple rate hikes have yet to ease inflation pressures. Core prices typically provide a better picture of underlying price trends.

    Overall prices rose 8.2% in September compared with a year earlier, down slightly from August, the government said Thursday in its monthly inflation report.

    It is a crucial period for retailers as they prepare for the holiday shopping season, which accounts on average for 20% of the industry’s annual sales. Inflation is already changing shopper habits, causing them to trade down to cheaper stores like Walmart and dollar stores and within aisles, switching to cheaper brands.

    Walmart and Target are among others that are pushing deals earlier while others are offering new financing for customers.

    Conn’s HomePlus, a Texas furniture and mattress chain that caters to households at the lower end of the economic scale, launched a new layaway program that caters to the 20% to 25% of the chain’s applicants not eligible to qualify for other financing.

    “(Shoppers’) ability to spend on discretionary is more limited than it was before, ” said CEO Chandra Holt. Sales on things like deluxe coffee makers other consumer electronics have faded, she said. .

    A slew of holiday forecasts from various research and consulting firms point to a sales slowdown from last year, but adjusted for inflation, retailers could actually see a decline. AlixPartners predicts holiday sales to be up anywhere from 4% to 7% from last year, which was up 16%, according to its calculations. The National Retail Federation, the nation’s largest retail trade group, hasn’t released its holiday forecast.

    Janet Barnes, a 42-year-old College Park, Maryland resident, says she’s trading down and going to cheaper stores for groceries as prices spike. Instead of Wegmans or Whole Foods, she now heads to the discount chain Lidl and said she saves about 40% in groceries. Thrift stores have replaced Nordstrom, she said.

    “We are creatures of habit, said Barnes. “But it is not a bad deal to see what else is going on — and test something else.”

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    Follow Anne D’Innocenzio: http://twitter.com/ADInnocenzio

    AP Economics Writer Chris Rugaber in Washington contributed to this report.

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