US retail sales have started off with a bang, with an overall growth rate of 4.9% recorded in January 2017, compared to 3.3% during that same period in 2016.
However, research agency GlobalData Retail has said that there are some red flags that suggest that this decent performance is not as strong as it first appears, predicting that the sector will have another turbulent year.
Neil Saunders, the managing director of the firm, said that last year's sales were soft due to inclement weather (such as Winter Storm Jonas), which changed consumers' shopping habits.
This year's growth rate was also shored up by a 13.9% rise in gas-station sales – the fastest pace of growth in a period just short of five years. This is due to the fact that the plummeting gas prices that became commonplace over the last two years are now over. The first price increases may go unnoticed by shoppers, but once gas prices really start to bite, sales will drop.
Saunders also pointed out that pure retail numbers, which exclude foodservice, auto and gas sales, hold some interesting details.
Sectors such as furniture and electronics saw a drop in sales over the previous year, and Saunders said that waning consumer confidence may have started to affect big-ticket purchases. While decline in these sectors won't persist, nervous shoppers may consider large purchases more carefully in the future.
However, clothing saw a bit of a bounce-back after an awful 2016, with a sales increase of 0.4%. This was largely due to lower January discounting rates, which were the result of better inventory control and fewer overstocks.
In conclusion, Saunders said that the year ahead will be "reasonable", but that growth will be varied throughout 2017, and some sectors will fare better than others.
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Karen Henderson. Click subscribe to sign up to ESM: The European Supermarket Magazine.
