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10/15/2021

Slight Bump in September Retail Sales

Retail sales were once again on the rise in September, although the increase was just 0.7% from the previous month.
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Compared to a year ago, retail sales are up 13.9%, but COVID-19 is still playing a big role in shopper behaviors. That’s according to the latest findings from the National Retail Federation (NRF), which found that dollars during the month shifted away from services, such as dining, entertainment or travel, and toward merchandise.

The sales increase comes despite supply chain challenges, including a backlog of retail imports as U.S. port congestion has stifled higher capacity. In addition, the retail industry is still facing a labor shortage, with retailers seeking thousands of employees to fill open roles ahead of the holiday shopping season.

“Today’s retail sales data confirms the sheer power of the consumer to spend, and we expect this to continue,” NRF President and CEO Matthew Shay said. “Despite persistent challenges related to the global pandemic, supply chain and labor shortages, retailers and their partners have shown resilience and ingenuity in getting the workforce, goods and systems in place to serve their customers and the communities where they operate.”

While September saw higher retail sales, the pace of sales was slower compared to August, when sales rose 0.9% from the previous month and 15.4% from a year prior. 

Even with occasional month-over-month declines, sales have grown year over year every month since June 2020, NRF noted.

 “The reopening of the economy was interrupted by COVID-19 and consumer spending other than retail hit a speed bump toward the end of summer,” NRF Chief Economist Jack Kleinhenz said in a statement. “Consumers remained active, but retail sales didn’t reflect as much of a shift away from goods to services as expected. That was a plus for retail because consumers still have a hyper-ability to spend thanks to wage and job gains and the household savings built up during the pandemic.”

NRF used the latest census bureau data to calculate retail sales, excluding automobile dealers, gasoline stations and restaurants, to focus on core retail. Retail sales are on pace to reach NRF’s prediction of growth between between 10.5% and 13.5% over 2020, to reach between $4.44 trillion and $4.56 trillion.

Sales were up in all but two categories. Electronics and appliance stores were down 0.9% month-over-month seasonally adjusted, but up 17.3% unadjusted year-over-year; and health and personal care stores were down 1.4% month-over-month seasonally adjusted, but up 6.9% unadjusted year-over-year.

“In addition, some back-to-school spending may have spilled over from August into September because of school districts that delayed opening until after Labor Day,” Kleinhenz said. “Overall, the September report is very promising for a strong finish for the year. Nonetheless, rising inflation and slower supply chains remain a concern. Spending might have been higher if not for shortages of items consumers are eager to purchase.”

The supply chain issues are likely to stick around, and many retailers are mitigating the issue by leveraging other suppliers, seeking other products to fill their shelves and even chartering their own cargo vessels to get products. President Joe Biden recently addressed the supply chain disruptions., noting that the two biggest ports in the U.S.––Long Beach and Los Angeles––are speeding up delivery of products with 24/7 operations.

“We welcomed the chance to collaborate with the Biden administration and industry partners this week to address supply chain and labor force issues,” Shay said. “We have seen record imports this year and are confident that collectively we can work through these challenges to ensure a healthy and happy holiday season.”