Ecommerce outpaces overall retail sales in April

Nonstore retailers grew 8% for the year, while overall retail rose 1.6%.

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Growth of U.S. retail sales continued to slow on an annual basis in April, as more signs of a consumer slowdown reared their head. But there was a bright spot for digital businesses: The category that includes ecommerce markedly outpaced wider retail.

Data from the U.S. Commerce Department for April 2023 showed the following:

Total retail sales were $686.1 billion, up 0.4% from March 2023. This reversed a trend of declining monthly sales that was observed over the last two months.

On an annual basis, retail sales grew 1.6% from April 2022.

Core retail sales, as measured by the National Retail Federation, rose 2% year-over-year. This measure strips out auto and restaurants.

Nonstore retailers, which includes ecommerce sales, grew 8% year-over-year.

What’s driving these numbers?

On a category level, a bifurcation is continuing to emerge between discretionary and essential categories.

There were annual declines in sales at furniture stores (-6.4%), electronics and appliance stores (-7.3%) sporting goods and hobby stores (-5.4%) and clothing stores (-2.3%).

Meanwhile, notable gains were made at health and personal care stores (+7.9%) and grocery stores (+3.7).

It’s the latest sign that consumers are tightening after months of rapidly rising prices, and increased interest rates that are starting to impact demand in key consumer spending drivers such as housing. Savings, which were robust during the pandemic, could also be in shorter supply. The retail sales data comes a day after the New York Fed reported that household debt surpassed $17 trillion for the first time in the first quarter.

NRF Chief Economist Jack Kleinhenz said that the slowing year-over-year growth came "partly because of upward revisions to last year’s data but also an early indication that credit conditions are tightening and excess savings are shrinking.” It was also driven in part by a massive 14.6% decline in gas station sales due to falling prices. As a result, April’s overall annual retail growth looks better when stripping away gas and motor vehicle-related retailers, for a growth rate of 4.3%. But that still remains more tepid than the high-single-digit range that was observed for much of 2022.

“While any growth is welcome, this was the shallowest increase in 31 months and marks a very significant deterioration compared to recent performance,” said GlobalData Managing Director Neil Saunders. “The earlier timing of Easter compared to last year may certainly have pushed a bit of spending from April into March, but the broader evidence suggests that a consumer slowdown is now firmly underway.”

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