Gen’l Merchandise, Appliances Offset Weak eComm as March Retail Sales Rise 0.5%

Despite rising food, fuel and housing costs that have distorted household budgets, U.S. consumers continued to shop last month, pushing overall retail sales up by 0.5% in March on the back of strength at general merchandise stores, such as Walmart and Target, and appliance and electronics retailers like Best Buy.

At the same time, eCommerce, or so-called non-store retailers, posted the single-largest decline of 16 major categories tracked in the government report, falling 6.4% for the month, versus strong year ago comparisons fueled by lingering COVID lockdowns and store closures.

According to the latest U.S. Department of Commerce report, the half-percent increase in March retail sales marks the smallest month-on-month increase since February 2021 and follows an upwardly revised February tally that bettered February’s sales to 0.8% from the 0.3% stall initially reported.

“[These are] reasonable numbers but, for the first time, they’re way below inflation and indicate that volumes have fallen. Consumers are now feeling the pinch,” Neil Saunders, managing director of global data at Conlumino, a retail research agency and consulting firm, said via Twitter after the data were released.

While also noting that the latest growth numbers were not helped by tough prior year comparisons, where sales grew 32.4%, Saunders said that fact was not going to change anytime soon.

“Retailers need to get used to this as comparatives remain very high for the next couple of months, and elevated for the balance of the year,” Saunders tweeted.

The Gas Factor

Backing out the 8% monthly increase in sales at gas stations, total retail and food service activity actually declined 0.3% in March. Other pockets of strength were seen in the 3.3% increase in the vast sporting goods, hobby, musical instrument and book store segment, as well as the 2.6% gain delivered by the clothing and accessories group.

While grocery stores and restaurants each rose about 1%, the auto dealers and parts category posted the second hardest hit behind eCommerce, with sales falling 1.9% from February.

The government report comes on the heels of Tuesday’s CPI report which saw headline inflation rising at a 40-year high of 8.5%.

While the short-term spike in energy prices triggered by Russia’s unprovoked attack of Ukraine continues to play a major role in all economic barometers, in recent days there has been a bit of a respite in fuel prices, at least for the moment.

According to the AAA, the national average price for regular gasoline has fallen 6% to $4.07 per gallon, from a record high of $4.33 hit on March 11.

Still, with consumer spending accounting for roughly 70% of U.S. GDP, there is widespread hope in the retail patch that every dollar not being pumped into gas tanks will be available for purchases in stores, restaurants and online retailers.