As US consumer spending patterns evolve in the pandemic era, B2C firms should continue to monitor near-term retail sales data for clues that may inform their product offerings, customer segmentation, and channel management strategy. US consumer demand is robust, and high pent-up savings will support strong growth next year, but rising inflation and persistent virus concerns will impact behavior.
US spending at retail stores, online sellers, and restaurants jumped 1.7% (nominal, seasonally adjusted) in October compared with the previous month—the third straight month-on-month increase and the fastest since March. Online shopping growth surged 4% from September to October. Spending at gasoline stations accelerated. Despite fading concerns about the Delta variant, spending at food and beverage stores continues to strengthen and is rising significantly faster than spending at restaurants and bars. Spending at clothing & accessories and health & personal care stores dipped.
October’s retail sales report holds several clues on how pandemic-era consumer spending is evolving. First, US consumers are so far unfazed about rising consumer prices, which increased 0.9% MOM in October. Since retail sales data is nominal, some of the 1.7% jump is accounted for by inflation. However, sales still rose significantly faster than consumer prices. Second, online retail continues to grow even as consumers are spending gradually more on in-person services. Some of the e-commerce jump may fade by the end of the year, as fears about delivery delays drive last-minute Christmas shoppers toward brick-and-mortar retail. Third, in-person service demand is strong, but continues to underperform relative to spending on goods. Overall, the report points to strong near-term consumer activity despite inflation concerns.
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