Economy Watch: Retail Sales Drop, But Not Really
- Feb 13, 2015
U.S. retail sales dropped a fair amount—0.8 percent—in January, but it’s a case of the headline number being a little misleading. During a period when gasoline prices are declining rapidly, overall retail sales are going to decline rapidly, too, because the Census Bureau adjusts its tabulations for a number of factors, such as seasonal variations, but not price changes. Gas prices yo-yo more than most things, or at least things that the majority of Americans buy regularly, so a more accurate reading of retail sales leaves out gas.
Without gas, the report wasn’t bad, with retail sales up slightly for the month. Since this time last year, all retail sales were up 3.3 percent, and without gas in the calculation, the annual increase was a healthy 6.9 percent. In other words, retailers and retail landlords don’t need to be concerned about retail sales, which have in fact recovered from the recession, though of course some retailers are doing better than others.
In fact, every retail category registered stronger sales in January 2015 than a year earlier, except gas stations (off more than a quarter because of gas-price drops). A few categories even scored double-digit increases in sales, such as car dealerships (up 10 percent year-over-year) and food and drinking places, up 11.3 percent. While it’s unlikely that car dealerships are going to expand much more in terms of the space they use, food and drinking places are another matter. If sales increases continue at this pace—and if the job market keeps getting better—then restaurants will be willing and able to lease more locations. The question is which restaurant concepts will enjoy the most growth in the current environment. It might not be some of the more standard eateries (that means you, McDonald’s).
Other kinds of retail sales that are doing well are building material and garden supply stores, which follow the recovery in housing, and sporting goods stores, which depend largely on the recovery in employment. Also something for retailers to note: non-store retail sales were up year-over-year by 8.3 percent, which is part of the continuing pattern of Internet sales increase. That’s acting as a check on the growth of physical stores, though not stopping it in its tracks.