This month's retail headlines cover a rise in sales, a deflation breakdown, a new high for Q2 ecommerce sales, and more.
---
Brick and Mortar
US economy on solid ground as retail sales surprise on the upside
U.S. retail sales rose unexpectedly in August, with strong online purchases offsetting declines in sectors like auto dealerships. The solid retail performance, coupled with a lower unemployment rate, suggests that the U.S. economy remains on stable ground, with the Federal Reserve likely to consider a smaller interest rate cut than previously anticipated.
Deflation breakdown for August 2024
In August 2024, deflation was observed in several sectors, including cars, household appliances, furniture, and certain groceries, with prices dropping due to improved supply chains and normalized demand post-pandemic. Although overall inflation has slowed, this disinflation trend includes pockets of deflation, particularly in goods, while services like food and rent have remained steady or increased.
Off-price retailers poised to take even more market share from department stores
Off-price retailers like TJX, Ross, and Burlington experienced strong growth in the second quarter of 2024, with higher sales, increased profits, and continued expansion. These retailers benefit from their focus on value-oriented customers, especially as consumers, pressured by inflation and accrued debt, prioritize cost-effective shopping, and the sector is poised to gain market share from struggling department stores.
Big Lots gets court OK for $550M in bankruptcy financing
Big Lots has secured $550 million in bankruptcy financing, allowing the retailer to continue normal operations, pay employees, and vendors, as it works through Chapter 11 bankruptcy. The company plans to emerge from the process under new ownership, with Nexus Capital Management offering $620 million for most of its assets, while also planning to reduce its store fleet.
Dollar General shares crater 25% as retailer cuts outlook, blaming ‘financially constrained’ customers
Dollar General's shares dropped by 25% after the retailer reduced its sales and profit forecasts for fiscal 2024, citing that its core lower-income customers are financially strained. The company reported lower-than-expected earnings and acknowledged the need for improvements in store operations and inventory management.
Used Retail Vehicle Sales Pick Up Steam in August
In August 2024, retail used-vehicle sales rose by 8% month-over-month, reaching the highest sales level since October 2021, with a total of 1.7 million used vehicles sold, marking a 13.6% year-over-year increase. Certified pre-owned (CPO) vehicle sales also grew by 11.1% compared to July, but remained 3.3% lower year-over-year due to limited supply of off-lease and trade-in vehicles.
Ecommerce
US ecommerce sales hit new highs in Q2 2024
In Q2 2024, U.S. ecommerce sales reached $291.6 billion, marking the third-highest total for ecommerce sales in a quarter, driven by strong performances from Amazon and Walmart, which both outpaced overall ecommerce growth. Ecommerce penetration reached 21.7%, continuing a trend of steady growth, while offline retail sales grew by just 0.8%, their lowest since early in the pandemic.
What We’re Reading
Biden-Harris administration takes aim at de minimis exemption
The Biden-Harris administration plans to limit the types of goods eligible for the de minimis exemption, which allows imports under $800 to bypass duties, targeting companies like Shein and Temu. The administration also proposes enhancing data collection and requiring importers to provide tariff classification numbers and Certificates of Compliance to improve enforcement.
Nearly One-Third of Consumers Plan to Begin Holiday Shopping Before November
A Gartner survey found that 32% of consumers plan to begin holiday shopping before November, and only 14% of U.S. consumers expect to increase their spending this year, while 64% plan to maintain their spending levels. Concerns about high prices, inventory, and security have driven more shoppers toward online and hybrid shopping options like Buy Online, Pickup In Store (BOPIS) and same-day delivery.
The pot farm next door: Black market weed operations inundate suburbs
Black market marijuana grow operations have become a widespread trend playing out not only in California, but in states such as Oklahoma, Oregon, New Mexico and Maine, with law enforcement frequently raiding homes in upscale neighborhoods converted for illicit cannabis cultivation. Despite these efforts, legal consequences remain minimal, contributing to a cycle where homes are raided, fixed up, and resold at higher prices, while the illegal operations continue unchecked.
