Retailers invest in stores despite weak US consumer spending

U.S. retail sales fell 0.8% in January from December as consumers cut back on spending. “January’s retail sales report suggests that consumers are being cautious about spending, even as consumer confidence gradually increases. Overall, occupancy rates Demand for space and physical space remains healthy, and the marketplace industry is on solid footing. Stores continue to be the driver, leading to continued strong performance, leading retailers to focus on physical footprint “We are modernizing our online offerings to entice consumers to spend in the coming months.” Tom McGee, CEO of ICSC, said: Although consumer demand was weak in January, some categories such as discount, specialty and beauty performed well as major retailers invested heavily in brick-and-mortar stores.

Investment in physical stores will continue in 2024

Walmart WMT recently announced plans to add 150 large-format stores over the next five years and plans to continue the expansion of Sam’s Club with 30 new warehouses in the United States. The company plans to renovate 650 stores in the states and Puerto Rico, said John Furner, president and CEO of Walmart US. The company already has more than 4,600 stores nationwide, including nearly 600 Sam’s Club warehouses.

Dick’s Sporting Goods continues to invest in physical stores, as discussed by Executive Chairman Edward Stack at the NRF Show in January. The company’s revenue increased 3.8% through the first three quarters of 2023 (fourth quarter and full year results not yet released).

Bernard Arnault, chairman and CEO of LVMH Moët Hennessy, said on the earnings call that “Sephora achieved another historic year in terms of sales and profits, and is proud of its unique and innovative products. “We continued to gain market share through our services.” The company plans to continue expanding its stores across the United States and maintain its strong partnership with Kohl’s.

Sales performance compared to the same period last year

Sales for the fiscal year February 2023 to January 2024 increased by 2.8% compared to 2022, and the Consumer Price Index (CPI) rose 3.1% for the 12th consecutive month, outpacing retail sales. Consumer prices for energy fell by 4.6%, but non-discretionary spending was affected by increases in the categories of shelter (up 6%), transportation services (up 9.5%) and food (up 2.6%). Masu.

Jonathan Silver, Founder and CEO of Affinity A ‘grocery basket’ that used to cost $100 now averages $125.51.” The solution.. “A recent Axios survey found that 59% of shoppers feel negative emotions, primarily anger, when they go grocery shopping, and 72% said the main areas most affected by inflation The emotional toll these prices take on is clear, with grocery items being cited as the top of the list.

Non-store sales (including digital and catalog sales) increased 7.9%. “The strong growth of the online sector confirms the consumer preference for convenience, with incentives such as free shipping and hassle-free returns becoming key differentiators in attracting shoppers to online platforms.” said Mr. Silver.

January cooler sale

January sales showed a rebound in consumer spending across major discretionary spending categories, including department stores, furniture and home improvement stores, electronics and electronics retailers, and home improvement stores. “In the face of changing economic trends, 2024 is shaping up to be the year of strategic consumer adaptation, with spending increasingly focused on health and personal care and online retail, with convenience and well-being taking center stage. While the importance of digital commerce remains a clear priority for retailers, many continue to invest in physical stores and create hybrid shopping experiences that increase customer loyalty. is producing.

Beauty and wellness will continue to be a hot category in 2024

The beauty sector continues to grow in the US market. “Our data shows that January wellness sales grew by a strong 9.7% year over year, with 58% of U.S. consumers saying they value wellness more than they did a year ago. “Consistent with McKinsey research, we expect this category to continue to grow for the foreseeable future, meeting the needs of people who care about their health and seek innovative solutions,” said Silver. .

Silver explained that there is a continued focus on health and wellness. “Post-pandemic, the “new year, new me” mentality may now be a year-round trend. As such, the wellness category is expected to continue to grow in 2024 as consumers spend significant amounts on health and wellness products. ”

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