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Economic Threats to Recent Retailer Gains

Coming off a solid back-to-school shopping season, retailers posted positive sales figures in the month of August. According to the National Retail Federation’s calculations, August retail sales (excluding automobiles, gas stations and restaurants) increased 0.2 percent seasonally adjusted from July and 3.8 percent unadjusted year-over-year.

“The retail industry continues to demonstrate its strength and resiliency during this fragile economic time,” NRF President and CEO Matthew Shay said. “However consumers and retail companies continue to face many questions and challenges, from stubbornly high unemployment and stagnant incomes to depressed housing prices and the looming fiscal cliff, all playing into overall economic uncertainty and declining consumer confidence.”

“Adding to this anxiety, retailers are now preparing for a potential labor disruption at the East and Gulf Coast ports, which may interfere with the all-important holiday shopping season,” Shay said. “NRF continues to reiterate its calls on management and labor to continue their negotiations up to and beyond the September 30 contract deadline. The last thing this economy needs right now is a work stoppage at the ports.”

August retail sales, released last week by the U.S. Department of Commerce, showed total retail and food services sales (which include non-general merchandise categories such as automobiles, gasoline stations, and restaurants) increased 0.9 percent seasonally adjusted month-to-month and 4.7 percent unadjusted year-over-year.

“While retailers continue to witness sustained sales growth, consumers remain cautious about their discretionary expenditures,” NRF Chief Economist Jack Kleinhenz said. “Consumers have carried much of the growth during the economic recovery, despite high food and gas costs. Though the economy isn’t backsliding, growth continues to be a sore point.”

Other findings from the August retail sales report include:

• Clothing and clothing accessories stores' sales decreased 0.1 percent seasonally-adjusted month-to-month but increased 7.8 percent unadjusted year-over-year.

• Electronics and appliance stores’ sales decreased 1.4 percent seasonally-adjusted month-to-month and 2.1 percent unadjusted year-over-year.

• Furniture and home furnishing stores’ sales increased 0.3 percent seasonally-adjusted month-to-month but 9.3 percent unadjusted year-over-year.

• General merchandise stores’ sales decreased 0.3 percent seasonally-adjusted month-to-month but increased 0.7 percent unadjusted year-over-year.

• Health and personal care stores’ sales increased 0.2 percent seasonally-adjusted month-to-month and 0.9 percent unadjusted year-over-year.

• Nonstore retailers’ sales were flat seasonally-adjusted month-to-month but increased 6.6 percent unadjusted year-over-year.

• Sporting goods, hobby, book and music stores’ sales were flat seasonally-adjusted month-to-month but increased 6.6 percent unadjusted year-over-year.

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