Sluggish Retail Sales Remain a Concern for Supply Chain Managers

While retail sales were up in April, the growth rate was less than impressive based on data released by the United States Department of Commerce and the National Retail Federation (NRF).

Commerce reported that April retail sales at $419.0 were up 0.1 percent over March and up 3.7 percent compared to April 2012. Total sales for the February through April period were up 3.7 percent annually.

The NRF reported that April retail sales, which exclude autos, gas stations, and restaurants, rose 0.6 percent on a seasonally-adjusted basis from March and were up 3.9 percent on an unadjusted basis annually. NRF officials said that improving employment data and an uptick in housing prices, coupled with a record-breaking stock market, helped to drive April sales.

“In the face of higher taxes and sequester, consumers provided the economy a bit of a reprieve this month,” NRF President and CEO Matthew Shay said in a statement. “Despite colder spring weather and an early Easter, consumers shopped in April, demonstrating an inherent resiliency even as the economy faces serious headwinds, including stagnant job and wage growth.”

As reported in Logistics Management—a sister publication— with retail sales growth modest at best, there still remains a mixed bag of signals and headwinds on the economic front, including a slightly declining unemployment rate, improving consumer confidence data, as well as encouraging automotive sales and housing data.

These things are occurring, though, against the backdrop of sluggish GDP growth and general uncertainty regarding the economy.

The continuing trend of slight or flattish sequential retail sales increases remains largely intact due to fairly even retail spending at a time when retailers remain cautious on the inventory planning side and postponing commitments until the until the economic outlook becomes clearer, while they are risking stock outages by having very lean inventories.

“After a poor showing in March, retail sales performed relatively well in April,” wrote IHS Global Insight Director of Consumer Economics Chris G. Christopher, Jr. in a research note. “The headline number was better than expected but still an anemic growth rate of 0.1 percent. Retail sales excluding gasoline and autos surged ahead at a robust 0.6% rate in April, after a flat March. Consumers started purchasing more discretionary items in April as pump prices started to fall. Most retail categories had a pretty good April with the exception of gasoline stations, grocery and drug stores. This is a good report. The first quarter was rough for many American households with the expiry of the payroll tax cut in January, rising pump prices in February, and elevated discussion of sequester issues in early March. “

Christopher added that consumers are taking advantage of falling pump prices, a relatively better employment market, modest consumer goods price increases, a strong stock market, and a housing market that seems to be gaining traction. But he noted that this is not a consumer lead recovery by any means, as many households face considerable headwinds.

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