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Consumer spending, including in ecommerce sales, continued to grow in February despite continued inflation and supply chain issues.
That's the picture painted by a series of reports issued this week. Here's a look:
US retail sales in February 2022 grew 8.7% over the same month last year, according to data from Mastercard SpendingPulse. That’s slightly above growth rates for January.
The gains reflected the return to more In-person activities following the omicron wave. This was evident in where they shopped, as in-person retail sales grew 10% year-over-year. It was also evident in what they bought, as top trends cited by Mastercard included return to office attire, which grew 37.6% year-over-year. Spending at restaurants increased 39.4% year-over-year, while luxury items, which are often purchased in-person, rose 55.4% year-over-year.
An indicator developed by Visa also showed consumer spending gaining. In February, the Visa U.S. Spending Momentum Index rose to 109.3, up from 102.4 in January. Spending by younger consumers far outpaced this group for most of the COVID-19 pandemic. With a 3.2% gap between cohorts, it is now approaching pre-pandemic levels.Visa developed this economic indicator using depersonalized transaction data to fill a gap to track ups and downs of consumer spending activity. When it rises above 100, consumer spending is strengthening. The fastest growth was among consumer ages 65 and older.
In the US, digital commerce sales made by retailers in February grew 6% year-over-year, according to data released by Salesforce. In the same period, global digital commerce sales decreased 5% year-over-year.
There were continued signs of ecommerce sales slowing when compared to the early days of the pandemic. Mastercard writes that “the shift to digital remains a persistent yet slowing trend.”
These figures arrived alongside news from the federal government that inflation reached a 40-year high in February. The Consumer Price Index rose 7.9% year-over-year in February, according to the U.S. Bureau of Labor Statistics. The closely-watched CPI
This extended to the realm of ecommerce. The Adobe Digital Price Index showed that inflation hit a record high of 3.6% in February, marking the 21st straight month of an increase.
Adobe said 13 of the 18 categories it tracks had increases in February, both when it comes to year-over-year and month-over-month comparisons. These categories included apparel (up 16.7% year-over-year), grocery (up 7.7% year-over-year) and tools (up 7.8% year-over-year).
At the same time, supply chain issues that are manifesting in crowded ports and product shortages continue. This resulted in a 1% decrease in product inventory in the US, and a 5% decrease in the same metric globally.
"Challenges that consumers experienced over the holidays, including inflation and low inventory, haven’t dissipated in the new year,” said Rob Garf, Salesforce VP and GM of Retail. “While digital commerce continues to prevail, it’s clear that inflation is having an impact on overall consumer spending. With these persistent headwinds, retailers must remove friction and enhance experiences by knitting together offline and online shopping.”
Trending in Economy
Brands can advertise any item beyond the primary variant.
Walmart Connect has a new advertising feature designed to help brands bring more products to the top of search results.
The news: Walmart Connect launched variant bidding for its sponsored search advertising The new feature is designed to help advertisers on the retail media platform increase discoverability of products on Walmart’s ecommerce site, and ultimately increase sales.
How does it work? Variant bidding allows brands to advertise items within a catalog beyond the primary variant. This could include size or color variations. It’s designed for advertisers seeking to promote multiple items. In turn, shoppers will receive options that are more relevant to search intent.
What’s the best way to get started? Walmart Connect offered the following tips for using the service:
- Identify your goal: Align variants with specific variants. For instance, a campaign for profitability should prioritize best-selling items.
- Evaluate your catalog: Not all variants need to go into one campaign. Focus first on high-converting, best sellers, top priority, and seasonally relevant items.
- Test and learn: Keep the varying nature of different campaigns in mind when adding more variants. Consider new campaigns, and unique identifiers for a keyword list.
Walmart Connect results: According to Walmart’s proprietary data, CTR for search in-grid position 1 is on average 4x higher than products in lower positions and the add-to-cart rate is on average 5X higher. Walmart said this proves a “substantial ability” to influence purchase behavior.Connect’s importance: It’s a reminder: Walmart is also an increasingly powerful advertising platform. And it’s delivering results. The retailer’s US advertising business grew 40% year-over-year. The quarter saw the highest spend all year in sponsored search ads. As Walmart grows its marketplace, advertising will only become a more important tool to stand out.