Resilient Consumer Spending Drives Record-Breaking Retail Sales Growth
At CenterCheck, we continue to monitor the dynamic retail landscape as consumer behavior defies expectations. For the third consecutive month, core retail sales have reached record highs, a rare achievement that underscores the resilience of U.S. shoppers. July saw a 3.4% year-over-year increase in consumer spending, outpacing core CPI inflation and boosting sales across nine out of ten core retail categories, with gains ranging from 0.4% to 6.7%.
This performance mirrors a similar period of robust retail activity last seen in August 2022. However, potential challenges loom on the horizon. National hiring rates are slowing, and household debt has soared to an unprecedented $17.8 trillion as of early July. Compounding this, the U.S. personal savings rate dropped to its lowest level since late 2022, indicating potential constraints on future spending.
Discount Retailers Thrive Amid Economic Pressures Online spending surged 6.7% year-over-year in July, the highest among retail categories. Amazon’s Prime Day significantly contributed, setting a new sales record of $14.2 billion, an 11% increase from last year. This trend highlights a growing consumer appetite for discounts and early back-to-school shopping. Not to be outdone, major retailers like Walmart, Target, and Shein launched competitive deals ahead of Prime Day to capture market share during the crucial school shopping season.
Dining Establishments Reap Benefits from Holiday Travel Record travel numbers over the Fourth of July weekend provided a significant boost to the dining sector, with nearly 20% of the population traveling at least 50 miles from home. This increase in travel translated to higher restaurant and bar spending, which rose 4.1% year-over-year in July. Moreover, foot traffic in dining establishments has been on an upward trend since June 2023, signaling strong demand for the limited vacant restaurant spaces available.
Grocery-Anchored Shopping Centers Remain Strong Grocery store sales also hit record levels in July, reflecting overall retail trends. With food-at-home inflation moderating to 1.1% annually, grocery sales grew by 2.9% year-over-year, positioning the sector for continued growth. The limited construction of new grocery stores has further tightened supply, driving vacancy rates to a 20-year low of just 2.1% in August. The active development pipeline remains minimal, representing only 0.4% of existing stock.
Store Closures Create New Opportunities for Growth Despite the strong retail performance, some chains face challenges. The national retail vacancy rate has held steady at around 4.5% for seven consecutive quarters, with 32.5 million square feet of space absorbed in the year ending in June. However, recent announcements from Big Lots, Conn’s, and Lumber Liquidators regarding store closures—potentially totaling 575 locations—highlight the opportunity for property owners and developers to reposition these spaces for new tenants.
At CenterCheck, we believe that these retail trends present unique opportunities for property developers, owners, and landlords. By staying informed and agile, we can help you identify and secure your next ideal tenant amid a constantly evolving market.