Connect with us

Fashion

Retail Sales Flat But Fashion Stores Take A Hit

Published

on

Retail Sales Flat But Fashion Stores Take A Hit

Retail sales remained nearly unchanged in April compared to March (seasonally adjusted), however, some categories are seeing down-trending sales for the first few months of 2024. As consumer confidence weakens and prices in some key non-discretionary categories rise, spending may retract over the next few months, especially in fashion categories.

Year-Over-Year Sales Decline In Fashion Stores

April sales compared to last year experienced an overall increase of 3.6%, however, fashion categories experienced a drop. Apparel and accessories were down 0.9% while department stores were down 5.3%. Even with the shift of Easter between last year and this year, the fashion segments are down. Furniture and home furnishings were down 7%. Categories that showed increases in the month compared to last year were nonstore (including ecommerce) up 12.8%, restaurants up 5.5%, and gasoline stations up 5.3%.

Consumers Feeling Cautious

Consumers are more pessimistic about the economic conditions including jobs and income which is weighing on their minds. “Confidence retreated further in April, reaching its lowest level since July 2022 as consumers became less positive about the current labor market situation and more concerned about future business conditions, job availability, and income,” said Dana M. Peterson, Chief Economist at The Conference Board.

Macroeconomic Factors Influence Spending

The macroeconomic environment is impacting how consumers are perceiving the current market conditions. Political and global conflict concerns have risen while consumers are feeling the continuation of price inflation in critical non-discretionary categories of shelter and gasoline. Food inflation, while unchanged for April, is 2.2% higher on a rolling 12-month basis. Gasoline prices were up 2.8% in April but before the seasonal adjustment, prices were 5.2% higher than in March.

The consumer is experiencing higher gas prices, rent/mortgage, and food, all of which impact the daily lives of Americans. Higher prices across these specific categories, impact the consumer’s spending mindset.

The Consumer Price Index (CPI) increased 0.3% in April on a seasonally adjusted basis, however, shelter and gasoline contributed to over 70% of the monthly increase. The Consumer Price Index (CPI) has increased 3.4% over the last 12 months.

Six More Months Of Uncertainty

Consumers continue to expect future business conditions, labor markets, and income expectations to look less favorable over the next six months, and retailers have been cautious. Inventory levels across most categories are below last year except for motor vehicles which have 23% more inventory. Sales of new vehicles from January through March were up 4.2% compared to the previous year whereas sales of used vehicles for the same period were down 9.6%. March was down 17% in used vehicle sales compared to 2023.

Retailers are better managing inventory levels in anticipation of softer consumer spending. Most major U.S. companies will report out earnings for the first part of 2024 in May which typical includes a consumer spending outlook. Based on April results, the fashion categories may see steeper signs of decline in the coming months.

Continue Reading