Fiscal Retail Sales Up 9.4% Surpassing Pre-Pandemic Levels
The financial year for many retailers ends in January, and recently released information shows that U.S. sales for the full year were up 9.4% (minus autos and gas and not seasonally adjusted). The sales increase does not consider inflation which was up 6.4% for the past 12 months. Most categories showed a positive increase over the 2021 fiscal year (February 2021 through January 2022).
January gave retailers a final boost for the fiscal year, with total sales up 3% from December and 6.4% over January 2022 (seasonally adjusted). “The January retail sales report underscores continuing consumer resilience. As inflation slows, the labor market remains strong, and consumers indicate a continued willingness to spend, particularly on dining and other experiences. We expect sales growth to continue throughout the year,” stated Tom McGee, CEO of the International Council of Shopping Centers (ICSC).
By category review
Gasoline stations were up 27.7% and grocery up 8.2% for the fiscal year, both impacted heavily by higher prices over the past 12 months. Non-store sales, including e-commerce, mobile purchasing, and catalogs, were up 10.6%, representing 15.8% of all retail sales for the year. Total nonstore sales in the fiscal year 2022 were 61% higher than in the pre-pandemic year 2019.
Fashion goods, including apparel, accessories, and shoes, ended the year with sales up 5.7% and well above pre-pandemic levels. The Consumer Price Index for apparel was up 3.1% for the 12 months ending January. While fashion goods performed well overall, department stores have not reached their pre-pandemic spending levels and finished the fiscal year almost flat.
Discount stores and warehouse clubs continued to grow, up 3.7% on top of last year’s 7.4% sales increase. As consumers look to save money amidst rising inflation and shopping convenience has become a key factor in purchasing decisions, the discount category has delivered on both elements. Since the pandemic, the category has risen 20% in annual sales.
Electronics and home appliances were down 8.1% compared to 2021. However, consumer spending in these categories in 2021 was up significantly at 24.3%. Based on the longevity of electronic products and purchasing frequency, consumer spending has slowed down. Holiday purchasing of electronics was between 13-15% less than last year, October through November, which added to the decline of this category’s full-year results.
Hybrid Shopping drives non-store sales
As e-commerce continues to grow and shoppers increasingly use services like curbside pick-up, mobile purchasing, and buying from social media applications, non-store sales continue to increase, up 10.6% for fiscal 2022. Hybrid shopping, customers using online platforms and shopping in physical stores, will continue to be a consumer trend in 2023.
In the pre-pandemic days of 2019, non-store sales represented 12.8% of total retail sales, and over the past two years, they have risen to 15.8% of sales. Shopping online is a consumer behavior that was accelerated with the onset of the pandemic and continues to be a prominent purchasing practice.
Inflation’s impact on fashion
The Consumer Price Index rose 0.5% in January (seasonally adjusted) after increasing only 0.1% in December. The all-items index increased 6.4% for the 12 months ending January; however, when food and energy are taken out, the increase for all other categories measured drops to 5.6%. Inflationary pricing has not significantly slowed down consumer demand but has made consumers more skeptical about purchasing products. Value and convenience are key factors in the purchasing decision, and these behaviors will carry into 2023. Continued pressures in non-discretionary categories will impact spending in discretionary categories like fashion-related items. Non-discretionary category prices for food, shelter, and fuel oil were up 10.1%, 7.9%, and 27.7%, respectively. Apparel pricing was up 3.1% for the past 12 months.