The Current, delivered daily.
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
Applications are open for startups interested in the 12-week Store Nº8 dCommerce Base Camp.
Walmart incubation arm Store Nº8 and Web3 accelerator Outlier Ventures are teaming up to support retail startups.
The organizations opened applications this week for the Store Nº8 dCommerce Base Camp accelerator. The virtual program will offer education, funding and mentorship to startups building solutions in Web3 that are designed for the retail and commerce experience.
Focus areas for selected startups will include decentralized infrastructure, data and growth solutions, immersive experiences and the metaverse and the intersection of AI and blockchain technology.
“We think dCommerce represents a huge opportunity to unbundle ecommerce into its constituent parts, and into a more decentralized and composable stack of protocols to create a more efficient, equitable and improved experience for retailers and consumers from CRM to last-mile delivery," said Outlier Ventures CEO Jamie Burke, in a statement. "There is clearly no better partner than Store Nº8, as Walmart's incubation arm, so we are thrilled to launch this accelerator program together.”
Beginning in mid-August, founders will take part in a 12-week program. The cohort members will receive funding and access to subject matter experts from Store Nº8 and Outlier Ventures. They will also receive support from industry mentors in areas such as product roadmap development, the token economy and fundraising.
“Decentralized commerce has the potential to unlock new value in the global commerce ecosystem, so we are excited to partner with Outlier Ventures to support and engage with entrepreneurs building at the forefront of this technology on their path to scale," said Store Nº8 VP Thomas Kang, in a statement.
The new program arrives in the year after Web3 and the metaverse saw a spike in interest from brands and retailers, as the arrival of immersive platforms opened up new digital environments where consumers gathered. Walmart entered the metaverse through an activation on Roblox, and also introduced a platform for digital collectibles. But it remains a nascent space, so there’s room for startups bringing fresh ideas to help larger enterprises develop capabilities. Alongside connections that help startups move forward, such learning is one potential outcome of the accelerator could last beyond the 12 weeks.
Applications for the accelerator are available here.