Inflation Be Damned: As Retail Sales Grow, Retailers Open More Stores
Despite pumped-up inflation, or maybe because of it, U.S. retail sales were up markedly in June, and retailers seem to be responding to the current economic crisis by opening more new stores than they are closing.
The Census Bureau reports that retail sales were up 1% from May, and up 8.4% year-over-year. That compares with a 0.1% month-over-month decrease and 8.2% year-over-year increase in May.
The National Retail Federation's take on retail sales, which excludes sales at automobile dealers, gas stations and restaurants, put sales in June up 0.6% for the month, and up 5.8% compared with a year ago. In May, the NRF calculated that sales were down 0.3% month-over-month and up 6.3% for the year.
"Inflation remains a challenge to consumers trying to make ends meet and will continue to be an issue even if it cools down in the months ahead,” NRF Chief Economist Jack Kleinhenz told Chain Store Age. “Despite that, consumers are holding up notably well and continuing to spend.”
Shoppers' enthusiasm for shopping in the face of higher costs may be a function of inflationary psychology setting in, as last seen in the early 1980s, when inflation was as high as it is now. Part of that psychology drives consumers to buy now rather than later, anticipating that goods and services will be more expensive the longer they wait.
Also in the face of inflationary pressure, retailers are now opening more stores than they close, and closing far fewer stores than they did last year, Coresight Research reports.
During the first half of 2022, there were 4,328 announced U.S. store openings, Coresight reports, compared with 1,912 announced closures. Altogether, retailers have announced 1.9% more openings than they did during the first half of 2021, and 58.1% fewer closures this year than during that period last year.
Forty-five percent of all store openings so far this year are among discount chains, according to Coresight, continuing a pattern of strong growth in that sector since before the current inflation, and in fact before the pandemic.
Apparel retailers, by contrast, continue to take a beating. They accounted for 33% of closures so far this year, Coresight reports.