Data paint a portrait — rarely a photo in stark relief, usually more along the lines of an impressionist painting. Connect the dots a bit, among far-flung data points, and the impression that emerges is … the consumer is holding up, and actually doing just fine.
That assessment comes amid headlines that flash, perhaps, other signals, and which come from macroeconomic corners: The yield curve inverted, then flattened. Interest rates are going negative in at least some regions in Europe. And of course, the global economy is slowing … and you might have heard that a trade war between the United States and China remains as a headwind to growth.
And yet, two of the data points that most immediately impact consumers, at least domestically, are benign. Inflation remains low, and so does unemployment.
The latest retail sales figures come from July, of course, and come before the latest back and forth about tariffs, but show that sales were up 70 basis points, above the 30 basis points that economists had forecast, and ex volatile auto and gas prices were up 90 basis points.
Dig a little deeper, and it turns out that internet retailers were up 2.8 percent in July, a jumped helped in no small part by Amazon Prime Day.
Earnings season, which for most companies provide snapshots of the three months that ended in July, show the secular shift at work for retailers, where clicks are replacing bricks, in a way. Walmart’s results showed that eCommerce sales in the U.S. gained 37 percent, helping the company report overall sales gain 1.8 percent. Sam’s Club eCommerce sales were up 35 percent.
Macy’s has posted double-digit eCommerce sales growth (though an exact number was not disclosed). The firm logged $1 billion in mobile sales in 2018, and the growth rate could top 50 percent this year.
And here lies the tale of two different channels — online and offline. There’s the tap of fingers on screens versus the absence of the pitter patter of feet in some stores, at least among traditional (read: not big box) retailers. For even though Macy’s pointed toward growth in digital activity, total sales were down 50 basis points. Similarly, JCPenney has pointed to improvement in eCommerce but overall sales were down 9 percent year on year.
The department store model has its headwinds in place, then, and across retailing in general store closures have topped 7,600. At least some estimates peg store closings to tip toward 12,000 by the end of the year.
“From what we see, the consumer is still in good shape,” Walmart Chief Financial Officer Brett Biggs said in an interview with CNBC late last week. “Low gas prices, strong employment, it’s really positive overall.”
The rising tide does not lift all boats equally. The sanguine outlook from Walmart is not shared, say, by at least some luxury goods retailers. Tapestry owns brands like Kate Spade and management has termed the current environment challenging.
For Walmart and Amazon, where staples are among the offerings, weathering a recession, without the (real) anchor of physical footprint that does not see, well, real footprints (OK, traffic) can make all the difference when a recession comes. But that recession may be farther off than conventional wisdom holds, and in the meantime, the firms that have invested heavily in eCommerce will pull further ahead of the pack.