Expert weighs in on January sales

Naveen Jaggi, president, Retail Advisory Services, JLL, weighs in on January retail sales, in the commentary below:

The U.S. Census Bureau released their advanced monthly retail trade report for January 2023, which showed sales totaled $697.0 billion, up 3.0% — the largest jump in retail sales in nearly two years. This advanced estimate also shows a 6.4% gain over January 2022. These numbers defied the predictions of economists, who anticipated a month-over-month increase of only 1.5%, according to a Reuters survey.

These numbers are adjusted for seasonal variation and holiday and trading-day differences. But they are not adjusted for price changes or for inflation, which remains elevated at 6.4% above year-ago levels, making the January 2023 numbers even more impressive.

While all retail categories showed positive gains from the previous month, department stores posted the biggest percent change with a 17.5% increase from December and a 5.4% increase from January 2022. This was a surprising increase given that we traditionally see slower sales for department stores post-holiday shopping season. Other notable increases include car dealerships, furniture stores and electronic stores.

In December, the holiday shopping season was a bit underwhelming because consumers started their holiday shopping in October, so by December most consumers had finished their shopping. But the shopping pause in December meant for some revenge shopping in January. Additionally, many retailers showed weaker earnings in January due to price cuts to move inventory, which means there were bargains for consumers.

Despite food prices remaining stubbornly high — meaning consumers still must devote more of their dollars to necessities rather than discretionary goods — people are still dining out, with restaurant sales up 7.2% from December and 25.2% from January 2022 to January 2023.

[Retail sales in January were up 1.5% from December and increased 4.8% year-over-year, according to the National Retail Federation, whose calculation excludes automobile dealers, gasoline stations and restaurants to focus on core retail.]