Retail sales slowed in July as retailers continued to face supply chain disruptions and consumers shifted some spending from goods to activities like dining out and traveling despite the delta variant, the National Retail Federation said today.
Retail sales were down 1.1% in July from June, but increased 9.5% year-over-year, according to the National Retail Federation. The July figure compared with a month-over-month increase of 1.1% percent and a year-over-year increase of 12.8%. (The NRF’s calculation of retail sales excludes restaurants, auto dealers and gasoline stations.)
“Despite this monthly dip, the economy has rebounded quite well and is more than just on the mend,” said NRF chief economist Jack Kleinhenz. “The consumer has continued to be resilient and recent price increases brought on by constraints in the supply chain have not dampened the robust demand seen during the past year. If retailers could find more inventory, they could sell it.”
Faced with another possible wave of COVID-19 infections, consumers have learned to live with the virus and shopping continues, Kleinhenz said.
“The delta variant could impact local markets, especially where vaccination rates are low, but doesn’t appear likely to show up in the national data,” he added.
Despite the recent rise in COVID-19 cases, consumers still want to enjoy the summer weather, according to Naveen Jaggi, president retail advisory aervices, JLL.
“In turn, food services and drinking places saw a 1.7% increase as most places offer consumers the option to sit outside rather than in an enclosed space,” he said. “Additionally, food services and drinking places saw a 38.4% increase from July 2020.”
The shift to spending on services was expected as more of the economy reopened. Also, the move of Amazon’s Prime Day promotion to June may have siphoned off some sales that normally come in July, Kleinhenz noted. A number of other major retailers held their own sales promotions in June to compete with Amazon.
Kleinhenz said that consumer finances are in good shape with a cushion from paying off debt and building up savings. Employment and wages have seen recent back-to-back increases, and advance child tax credit payments going out for the second month in a row should provide a bump for spending.
For the first seven months of the year, sales as calculated by NRF were up 15.5% over the same period in 2020. That is consistent with NRF’s revised forecast, which calls for 2021 retail sales to grow between 10.5% and 13.5% over 2020, to $4.44 trillion to $4.56 trillion.