Buttons on an old-fashioned cash register.
By now, many of us are more than familiar with the nervous consumer culture we are currently experiencing. Despite whispers that inflation is easing some, it remains a growing concern for many. On May 16, the U.S. Census Bureau released retail spending results for April. Remember, major holidays that often involve spending and gathering, including Passover, Easter, and Eid, took place during the month.
Despite the holidays, the April numbers are telling. What they’re telling me is that consumers continue to offset higher costs by prioritizing their spending and allocating their money more mindfully. We have a long way to go before a majority of us are ready to spend like our money is “going out of style.”
Up first, let’s look at total sales for the month, which came in at $686.1 billion, up slightly from $683.2 billion in March and down from $687.9 billion in February. When compared to April 2022, however, sales have gone up from $675.2 billion.
Chip West, retail and consumer expert at Vericast, noted that sales managed to “bounce back in April.” West also added that the 0.4% bounce compared to March was also “slightly lower than many projections.”
In his update, GlobalData Managing Director Neil Saunders proclaimed that retail growth “held on by the skin of its teeth” in April.
“While any growth is welcome, this was the shallowest increase in 31 months and marks a very significant deterioration compared to recent performance,” wrote Saunders.
Gas stations were one of the biggest decliners in April, reporting results of $54.6 billion, down from $55 billion in March. Food and beverage also fell to $81.7 billion from $81.9 billion in March. Consumers avoided upgrades to electronics and appliances, which fell to $7.6 billion from $7.7 billion. Many also skipped the home furnishings category, which fell to $11.3 billion from $11.4 billion.
Clothing and accessories also fell to $25.4 billion from $25.5 billion in March. “Here consumers are thinking more carefully about what they want and need and have cut back on the number of items they buy,” writes Saunders.
“Consumers in April remained focused on necessities,” wrote West. “But they are likely also spending more on services. Clearly economic challenges are still impacting consumers, but easing inflation may have given many Americans that little boost in spending power.”
He’s not wrong. Despite the categories that declined, April also saw a few winners. Take, for instance, motor vehicle parts and dealers, which rose to $129.9 billion from $129.4 billion in March. That slight increase reflects the continued trend of maintenance on the vehicles we have versus upgrades.
Another winner was the general merchandise category. As the biggest gainer in April, general merchandise rose to $73.4 billion from $72.8 billion. Food service and drink also saw gains, rising to $88 billion from $87.5 billion in March.
Although home furnishings suffered, our love of home improvement still reflected as a positive in April. Building and materials stores rose to $41.5 billion from $41.3 billion in March. And more consumers took on the mantra to “treat yo self” by spending in restaurants ($88 billion up from $87.5 billion in March) and on personal care ($35.5 billion from $35.2 billion in March.)
Of the dining out, Saunders notes that it “also reflects the trend of people increasingly turning to experiences over buying things.”
Going forward, West writes that the consumer continues to learn “how to adapt to higher costs and put these skills to good use, increased savings on essentials through savvy shopping may free up budgets for discretionary purchases that have been delayed—even opening up a chance to “splurge.””
During this latest numbers release, several retailers have checked in with quarterly results and updates. We will examine some in-depth in the coming days. Piyush Patel, chief strategic business development officer of Algolia, notes that “Leisure spending is running at a slow pace and analysts are predicting a downward trend as major retailers like Walmart
WMT
TGT
We expect the May Census results on June 15. Meanwhile, summer is just around the corner and we will also keep an eye on what the summer days might bring in both the leisure and weather departments and their impact on retail sales.
