Waiting Game for the US Retail Market

Original release date: July 15, 2022

The US retail market saw another month of growth in June, with All Stores increasing by 8.9% YOY, and All stores Less Automotive, Food, Pharmacies up 7.5% YOY.

This seems like good news, but we feel this is not sustainable. Essential categories like Grocery and Gasoline Stations are still up significantly (8.9% YOY and 49.9% YOY respectively), but these numbers can be deceiving. The inflation rate on both these categories are also some of the most rapidly growing, with Grocery seeing a 10.4% inflation YOY and Gasoline Stations seeing a 59.9% inflation YOY. This translates to two consumer trends:

1. US consumers are shopping differently at grocery stores, trading down in certain categories and brands.
2. US consumers are driving less.

These trends show that the US consumer is at a point of drastic change, and the traditional big box stores with large retail footprints/many national brands on the outskirts of suburbia are not going to be seeing the traffic they once were. Bed Bath & Beyond is a perfect example of this. The big box retailer has recently ousted their CEO after a decrease of 25% in their sales compared to 2021, losing nearly three-quarters of their market value since March. The category (Furniture and Home Furnishings Stores) is also seeing less impressive growth, with a growth of merely 4.8% YOY.

With US retail markets still seeing unsustainable, and misleading, growth, we suspect retailers to be preparing for this sweeping consumer shift. This month we are asking:

• Who are US consumers going to stop shopping with?
• What will climbing interest rates do to retail performance?
• When will US retail markets start to level off?
• Where will consumers decide to cut back the most?
• How have YOU prepared for the change in consumer behaviour?

Reach out to JCWG for insights on your consumer’s behaviour and to gain a deeper understanding of how they have changed. Join us next month to see if July levels off the uncertain US retail market.