The buzz is back in retail and the recently released Government data confirms the movement, announcing that US retail sales rose about 6 % year-on-year in the Maythrough-July period, which roughly lines up with the second fiscal quarter for retailers. More encouraging is the fact that sales in clothing and clothing accessories stores rose 6.6 %, higher than the overall retail sales average. In July alone, US retail sales increased 0.4 % over June sales and 4.9 % Y-o-Y, according to the National Retail Federation( NRF). Online and other non-store sales climbed 11.3 % Y-o-Y, the NRF noted. What is exciting is that consumers continued to spend despite fears over the escalating trade war. In fact, the NRF has revised its annual forecast for 2018 based on the current flip in sales. The organisation now expects retail sales for the year to grow at least 4.5 % over 2017, rather than its original prediction of 3.8 % to 4.4 % growth.“ The numbers mirror the economy, which is in very good shape,” said NRF Chief Economist Jack Kleinhenz, adding,“ Consumer fundamentals remain healthy and
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continue to provide wherewithal for consumers to drive domestic economic growth.”
Retail analysts believe that this upward swing in retail has been brought about by a combination of many positive reasons. Higher wages, gains in disposable income, a strong job market and record-high household net worth have all set the stage for very robust growth in the nation’ s consumer-driven economy.
The positive sentiments have come at a time when retailers were looking for survival strategies. NRF, in particular, believes that this is opportunity time for retailers, attributing its upgrade in growth to better-than-expected consumer spending in H1 of the year. However, adding a note of pragmatism, Kleinhenz said,“ Uncertainty surrounding the trade war and higherthan-expected inflation due in part to increased Crude Oil prices could make consumers cautious during the Fall season.”
Off-price retailers are the best placed for growth …
Coincidentally, the retailer growth indicators that have come in roughly
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ESSENTIALS
Unemployment in the United States is at its lowest in 50 years and industrial production is growing at some of the fastest rates for 20 years, helping US consumer sentiment rise to multi-decade highs. Several companies, including the world’ s largest private employer Walmart Inc. and Costco Wholesale Corp, have used reforms in the US tax code to award bonuses, benefits and hike wages for their employees.
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line up with the second fiscal quarter for retailers and results announced are encouraging. The best results have come in from off-price retailers that are growing on the‘ value-proposition’ ideology that they represent. Dollar Tree, TJX and Ross Stores currently lead the segment. The obvious growth has encouraged Dollar Tree to open more than 600 stores in 2018. This discount growth could be attributed to continued thrifty mindsets following the recession, stagnant wages, etc. And consumers may increasingly enjoy a‘ treasure hunt’ experience of finding the best deals.
In fact, off-price retailers have steadily gained market share at the expense of their full-price rivals in recent years. Earlier, in May, management at both TJX and Ross Stores had shown concern about the late start to Spring, fearing that it would negatively affect sales in the first quarter. Nevertheless, both off-price leaders posted solid 3 % comp sales gains in Q1, beating their forecasts. Based on this, some retail watchers predict that TJX and Ross Stores could report Q2 comp sales gains of around 5 % or even higher.
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