Macroeconomics Insight Center

Key takeaways

 

  • Shoppers surveyed through ShopperScape® signaled that they would curtail some of their spending after the holiday, likely to pay down credit card balances and recoup savings.
  • Online shoppers dialed back their spending in January after driving the strongest nonstore growth in decades in December
  • The supercenter, club, and discounter channel kept its momentum in January after a strong holiday, suggesting Walmart and perhaps select discounters had a solid fiscal fourth quarter.

Top-line retail growth that excludes the food service channel, automobile dealers, and most gasoline stations managed only half of the previous month’s growth. Here’s a summary and analysis of January channel performance. (Channel retail sales data from recent months is available at the end of this blog. Kantar Retail IQ clients can access more charts at this link.)

Nonstore vs. brick-and-mortar: Shoppers pulled back on in-store and online spending in January.

After shoppers sent nonstore growth surging to a 19-year high in December, their spending eased in January. The narrower online channel results for the fourth quarter, due for release later in February, will likely show much stronger growth than last holiday, but it seems the channel has slowed early in the first quarter. Notably, Amazon’s year-to-year growth in its fiscal fourth quarter indicates it outpaced online growth in the past three months. (Most retailers’ online sales are captured in this channel, not just pure-play online retailers.)

Supercenter, club, and small-format value: Growth in this channel jumped to a nine-month high in January. The broader channel measure suggests that growth in the warehouse club and supercenter channel, reported with a one-month lag, is off to a strong start this year. Costco’s January results indicate the retailer slowed a bit in January even though it led most other retailers in the month. Costco’s trend, which contrasts with the strengthening channel, might suggest that Walmart or the other clubs ended their fiscal fourth quarters on a very strong note. Most supercenters and clubs haven’t yet reported.

The small-format value channel has been the weak spot in recent months, including December. Fred’s bankruptcy has contributed to the weakness. Thus, it is unclear if key discounters Dollar General and Dollar Tree fared better this holiday or in January.

Supermarket: This channel lost momentum in January after a strong December. Ahold Delhaize, one of the few supermarkets to report for the most recent months, posted improved growth, but lagged the channel average. Quarterly retailer results available only for the months before December suggest Publix likely led most supermarkets over the holiday, while Albertsons and Kroger lagged.

Drug, health, and beauty care: This channel posted a year-to-year decline for the second time in three months partly due to Walgreens store closures. CVS beat the channel average for the three months through January, suggesting it topped at least some of its key drugstore competitors during this period. According to results available only for prior quarters, Walgreens and Rite Aid lagged behind CVS and the channel average.

Home improvement: Channel sales decreased in December due to heavy winter precipitation and a comparison to strong growth a year ago. The January decline followed meager channel growth over the holiday, partly due to the declining lawn and farm supply channel. Still, channel results suggest home centers, such as Lowe’s and Home Depot, managed only modest growth in their yet-to-be reported fourth quarters.

Apparel, jewelry, and shoe specialty: Growth fell flat in this combined channel. Based on data available only for the previous month, specialty clothing and shoe stores posted an aggregate sales decline this holiday, while jewelry stores posted modest growth.  

Traditional and discount department: January brought no relief for this combined channel’s steep sales decline. Target reported positive, yet slower growth in November and December. The channel trend, which includes several underperforming traditional department stores, may signal Target’s modest growth trend continued into January. Store closures at Macy’s and likely other traditional department stores that have not yet reported fourth-quarter results will weigh on channel growth in the coming months, but sales dollars could shift to competing retailers, such as Target.

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