Households are sustaining a modest-to-weak pace overall in retail sales, but there are pockets of stronger spending at home-related and online retailers. The weak spending remains focused at electronics stores and big-box mass retailers.
New weakness is emerging at grocery stores, as households capitalize on moderating inflation in food prices (and gasoline prices) to economize and offset spending elsewhere.
Beyond home-related and online retailers, household spending remains strongest in categories that are not core retail places. Auto dealers and restaurants are among those places.
That’s the big-picture takeaway from the latest data through September from government-reported sources, as summarized in the graphic below.
Impact @Work: The weakness at big-box mass retailers and grocery stores is early evidence of the toll that price cuts will have on store retailers this holiday. A key to good holiday performance will be to use promotions strategically to boost demand, without being overly aggressive. For more, see the holiday outlook post at this link.